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October 17, 2006
Starbucks Gossip's 'ghetto latte' post has more than 500 comments
Remember the ghetto latte? That's when a Starbucks customer orders a lower-priced drink, say an espresso, and turns it into something more ... milky with stuff from the condiment bar. Well, it has created an Internet/dead-tree-media firestorm, whatever that means, and Starbucks Gossip's original post on the matter has over 500 comments.
Now if you want to know what your barista really thinks, Starbucks Gossip is the place to go, since many of the comments on the various posts come from bona fide S'bux workers. Like this one on "ear gauges" -- those scary-looking things that look like tribal ear-mangling devices, which are allegedly being banned from the lobes of baristas ... if they're larger than a nickel. Yummers.
Back to the Ghetto Latte:
Business and ethics professors weigh in (with further link to the Chicago Tribune for registered users: "The Bootleg Latte: Would You Make One?" Hint: my L.A. Times login and password worked on the Trib site ... hmmmmm.
Here's an excerpt from the longish Trib piece:
Joel Goldhar, professor at the Stuart School of Business at the Illinois Institute of Technology, was called to comment as someone with expertise in business ethics. He didn't see it as a question of ethics, however, but capitalism in action.
"I believe in capitalism," Goldhar said, "and prudent people who see the same product at different prices will find a way to get the cheaper one. What's the difference between the Starbucks thing and my flying to Florida for $175 while the person in the seat next to me is paying $450? If your diesel car runs on home heating oil, which is cheaper, maybe you think about getting a 500-gallon tank installed. If you order a coffee in a cafe on the Champs Elysees, what are you really buying? Not the coffee. You're buying the view, and you're buying it with the cheapest thing on the menu."
A law professor, Randal C. Picker of the University of Chicago, weighs in (Same thing with Chicago Tribune, which seems to be all over this story. If only the L.A. Times had content like this ...) Latte serves up a lesson in bootleg economics:
We should go to Starbucks. This is a language I barely speak--I don't drink coffee and only occasionally have a hot chocolate at Starbucks--but here is the strategy as I get it. A doppio is described as a double shot of espresso that would usually be served in an 8-ounce cup. That would set you back $1.75. A latte, which goes for $3.20, is a double shot of espresso plus milk and foam in a 16-ounce cup. Our arbitraging customers order the doppio but ask for it in a 16-ounce cup and then add free milk available in canisters at Starbucks. Pop the cup in a microwave, and you have the latte and have saved $1.45. (This, of course, is just saving money; real arbitrage would mean that enterprising customers would start selling the fake lattes in competition with Starbucks, but the Trib article didn't say anything about that.)
This gets us to the limits of free milk. Starbucks provides free milk so that customers who want to add milk to their coffee can do so. Call this the permitted use or intended use. Customers know how much milk they want in their coffee and can do that best on their own. But Starbucks has no simple way to control how "free" milk is used at its stores. Starbucks obviously could post signs or refuse to sell drinks in wrong-sized cups. The cup size limit is the most natural technical constraint; signs would be more directly contractual but would detract from Starbucks' ambience.
Previously: Table Talk's original 'Ghetto Latte' post.
Posted by Steven Rosenberg at October 17, 2006 1:04 PM