Originally published at: https://boingboing.net/2020/05/14/starbucks-says-it-will-thriv.html
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Are we wringing our hands for those poor landlords? Seems like this is just a bunch of businesses jockeying for position. Who cares?
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Telling your suppliers that you plan to pay them less can definitely be an ingredient in ‘thriving’, if you can get away with it.
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Walmart has done it for decades.
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It’s almost as if they are following a business model used by someone else…
You know, stiff contractors after the work is done…
When it comes to landlords vs. Starbucks, I’m finding it tough to pick sides. When unemployment starts hitting the mid-%30s you’re going to find a lot more businesses and people unable to pay the rent. If you evict/foreclose now the landlord/bank is losing money. It’s not personal; just numbers. Less people can afford their digs, the lower the rent is going to have to be. New times.
Disclaimer: working at Starbucks got me through junior year in college. They’re not nearly as good as my local coffee shops, but I hold no ill will against them. I still think their pastries are crap, though.
Disclaimer: I’m married to a pastry chef.
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The good ol’ chaos model of corporate existence: “fling shit in all directions and monetize on whatever sticks”
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Yep, if you’re in a position to get away with telling your landlords you aren’t going to be paying them the full rent, you’re in a position to thrive. Especially when all the small coffee shops, that can’t do that, go under.
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that Starbucks “will not just survive, but with adaptations and new routines, it will thrive.”
The company never said that it would be the one adapting.
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Retail landlords are probably aware by now that things are going to suck for the foreseeable future, so they’re likely to go along with this. Unless the rules get changed to make it more profitable to have empty storefronts. Oh, wait…
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It’s the law of the jungle–only the strong survive. It’s not their fault you didn’t prepare for the pandemic by being a dominant corporation.
If only there were some mechanism to rein in the excesses of the giant corporate bullies.
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At some level, though, they’re not wrong about rents needing to fall. Let’s say that the landlord kicks them out for not paying the rents that were agreed to in the lease. There’s no particular reason to believe that any other tenant will be able to pay that rent with social distancing rules in place for the foreseeable future. And if the banks foreclose because the landlord can’t make his mortgage with the reduced rents that can be charged in this pandemic-world, they’re not going to be able to SELL the property for a price based on impossible rents. I predict that retail real estate is going to suffer a bloodbath before all this works through the economy. The only ameliorating factor is the greater square footage required to maintain social distancing.
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Choosing between Starbucks and landlords?! A pox on both their houses!
… What? They’ve already got one? And that’s the problem? Oh, okay. Carry on then.
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Here in Vancouver the retail rents in shopping districts are tied in part to the property taxes. The property tax is calculated on what the land is zoned for, not the current building total square footage. This drives up the total monthly rent to insane levels.
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The only times I’ve been in a Starbucks was to pick up an Austin Chronicle. And then they decided not to have them distributed on premises. Fuck 'em.
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I agree with all this. In the short term retail property just isn’t worth as much as it used to be, and tenants are not able to pay as much. Adjustments are inevitable.
However, in practice, the problem I have is that this is going to turn into a game of musical chairs with everybody trying to offload the costs of a pandemic onto somebody else. A Starbucks is in a position with leverage enough to cut a deal, or to walk away where they can’t reach an agreement, and still be fine, but your local neighborhood coffee roaster doesn’t have that leverage, and their landlord is going to squeeze them to death to try to keep their own income up. The local shops are the ones that will end up without a chair because they’re in the most vulnerable position. Maybe some will end up able to rent a former Starbucks location for a song after the landlord couldn’t strongarm them and can’t find anybody else, but most small businesses will just be dead and gone before they could exercise such an opportunity.
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It seems like everyone will get hosed except the banks, who will own lots of real estate and then get bailed out anyway.
The pain never gets shared uphill for long. If my pal’s tenants can’t pay, she’s in trouble. If she can’t pay her mortgage, the bank just takes her house. Then, when they can’t sell it, they’ll get tax write offs and a bailout. Yay America?
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Yep. And that is going to make the recovery of the overall economy slower. I don’t know why people think that this is going to be a “v” shaped recession. Lots of assets that are overvalued and everybody fighting tooth and nail to not take the losses themselves. This is going to resemble the great recession, only worse because we’re STARTING OUT with the worst unemployment in nearly 100 years and people are dying. We couldn’t get the banks to take their share of the losses when they were submitting forged documents to complete foreclosures during the great recession, and saying with a straight face that none of it was their fault. This time it really ISN’T their fault, and that just might make it a bit cheaper to buy the politicians needed to prevent them from taking most of the losses.
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No burned-up tasting coffee for you?
I think that the landlords now have to accept similar propositions for smaller coffee shops now and other businesses.
Because half the rent is better than no rent, and in this moment is difficult to find other shops willing to start.
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if landlords don’t like the current situation I’ve got a great solution - abolish private property.
Honestly, if being a landowner doesn’t suit you there’s a pretty easy way to stop being one.
With Starbucks the power relationships between the landlord and tenant is probably the opposite of what it normally is, but my sympathy is never going to be with property owners demanding a cut of economic activity based on the logic that if they already have wealth, they deserve more wealth. This is why r > g.
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