Why does Starbucks sometimes have coffee shops on both sides of the road?

Where you did well

I think you provide some meaningful criteria on why Starbucks sometimes have coffee shops on both sides of the road.  I also want you to take my where you could have done better section with a grain of salt – I reframe the question to give more space to work.

1.       Describe the company – great job and great job of framing the problem based on traffic into the store.

2.       Not using the exact framework – I don’t think the question (as framed) lends itself to the exact framework .  So good job not using it.  However if you reframe the question a little to when does it make sense to have a Starbucks on both sides, then the framework works better?

Where you could have done better

1.       Clarifying questions – I think this question is straight forward and you skipped this step.  I think it’s OK here – given the way the question was framed to you.  However, some questions to the interviewer may set you up for part two of this question – which I would imagine is – When would you recommend, or estimation – how many Starbucks…

2.       I think a slight reframe of the question to “When would it make sense for Starbucks to have a coffee shops on both sides of the road” makes it a more interesting question and response.

a.       If you reframe to when then you can get onto framework

b.       strategic choices

                                                               i.      Place a Starbucks

                                                             ii.      Place a Starbucks down the road

                                                           iii.      Place a Starbucks across the street

                                                            iv.      Don’t place a Starbucks

c.       evaluation criteria

                                                               i.      Starbucks has 1000’s of locations nationwide when thinking about a location some evaluation criteria would be

·       Is there sufficient opportunity to acquire customers

ü  Population

ü  Demographics of the location

ü  Access to the store location (drive through, foot traffic, etc.)

·       Is the store in a location where it can be supplied?

·       What is the competition for that space?

·       What is the proximity to another Starbucks?

d.       When does it make sense to place one across the road?

                                                               i.      Assumption - Having been in a lot of Starbucks they all have a similar layout and similar size.  This likely means that you can’t just expand the size of one indefinitely; so if the population supports more than one Starbucks – you can’t just continue to expand the location you need a second location. 

                                                             ii.      Applying the criteria

·       Population – it likely make sense to have a 2nd Starbucks when the population of a location (example NY City  Intersection) has enough population that it exceeds the capacity of a single location while factoring in typical Starbucks size and layout).

·       Demographics – there is already one location here – so I assume that we have covered demographics such as income levels, coffee drinking habits of the neighborhood, etc.

·       Access to the store – is the intersection busy with lots of foot traffic on either side, Is it inconvenient to cross the street.  Same goes for driving traffic.

·       Can it be supplied – already supplying one location

·       Competition – what does the competition look like?

·       Proximity – across the street

                                                           iii.      Conclusion

·       It makes sense to have Starbucks on opposite sides of the road when the total addressable population is high enough to support an additional Starbucks and one or more of the following is met

ü  Inconvenient to get to the Starbucks on the other side

ü  Can’t expand the existing Starbucks because of location, or because there are limiting factors in the size of a Starbucks to stay on size and layout.