How Starbucks boosts local economies with caffeine

Starbucks is known for its innovative menu options, with some social media users even creating their own unique and Instagram-worthy drinks by hacking the chain’s menu. For example, customers can order a “cake batter Frappuccino” by asking for a vanilla bean crème Frappuccino with a pump of hazelnut syrup and a cake pop blended in. Another popular creation is the “liquid cocaine”, which consists of four shots of espresso with four pumps of white-chocolate syrup served over ice.

In addition to creative menu items, a new working paper by Choi Jinkyong, Jorge Guzman, and Mario Small from Columbia University suggests that Starbucks offers other forms of innovation as well. The researchers found that opening a new Starbucks in a neighborhood without a coffee shop can lead to the creation of between 1.1 and 3.5 new companies per year over the next seven years. This phenomenon is attributed to Starbucks serving as a “third place” where people can gather without a specific purpose. According to the authors, Starbucks branches help entrepreneurs form and mobilize networks, contributing to the growth of new businesses in the area.