Starbucks's Open-Bathroom Policy Is Affecting Its Business, Study Says

• Starbucks' open-bathroom policy may be taking a toll by reducing the number of customer visits compared with rivals, a recent study found.
• The coffee chain opened its bathrooms to everyone in May 2018 after a store manager called the cops on two African-American men who wanted to use its bathroom while waiting for a business meeting.
• Starbucks dismissed the outside study, pointing to higher sales at its stores. "Our business has never been better," the company said.

Starbucks opened its bathrooms to the public in May of 2018, part of an effort to counter accusations of racism after an incident at one of its Philadelphia cafes. More than a year later, a new study suggests the policy shift is having at least one effect: reducing customer visits compared with rivals.

Starbucks's open-facility policy is an example of the challenges private companies can face when they offer public services, like bathrooms, according to the researchers, Umit Gurun of the University of Texas at Dallas and David Solomon of Boston College. The problem, they say, is that non-paying visitors can crowd out potential paying customers, hurting business. 

To gauge the impact of Starbucks's open-bathroom policy, the researchers examined anonymized cellphone location data from more than 10 million devices from January 2017 to October 2018, a span that covers a period before and after the change in the company's rules. Then they compared the data to business at restaurants and cafes located near Starbucks shops to assess changes in customer traffic. visits. The upshot: Visits to Starbucks dipped 6.8% compared with rivals, the researchers said. 

Starbucks dismisses the study, pointing to higher overall sales at its U.S. locations. 

"The findings of this company-backed study are not only inaccurate, but do not take into account the habits and purchasing behaviors of our more than 100 million weekly customers," a Starbucks spokesman said in a statement, referring to the researchers' use of data from a company called SafeGraph. He added, "Our business has never been better."

Solomon of Boston College said the analysis is an independent academic study, and that they received no funding from SafeGraph, nor did the company influence their research. "Our sole relationship with them is that they provided us with the data to run the study, and we presented our results to them," he notes.

"Better estimate"

Solomon said their findings and Starbucks's report of higher sales aren't necessarily at odds, noting that the study is capturing a more nuanced measure than sales, with the analysis comparing Starbucks customer visits to that of rival coffee sellers.

"We claim that this gives a much better estimate of the true effects of the policy, because comparing to nearby coffee shops allows us to strip out effects like the economy growing in general, consumers drinking more coffee, and a whole lot of other things that might make Starbucks sell more or less coffee but have nothing to do with the bathroom policy," Solomon wrote in an email to CBS MoneyWatch. 

He added, "In other words, Starbucks went up a little bit, but matched nearby coffee shops went up a lot more."

To be sure, Starbucks has been battling a number of issues. For one, analysts have grown concerned about the chain's rapid expansion and whether it might be cannibalizing its own business. New stores may be diverting 1 out of 7 transactions from older Starbucks, an analyst noted last year. It's also facing resurgent competition from rivals such as Dunkin' and McDonald's, as well as a host of smaller shops.

Shorter visits?

Customers also spent 4.2% less time in Starbucks compared with rival coffee stores after the bathroom policy changed, the study found. 

"Wealthier customers reduced their visits more, but black and white customers were equally deterred," the researchers wrote in the paper. "The policy led to fewer citations for public urination near Starbucks locations, but had no effect on other similar public order crimes."

The dip in Starbucks visits compared with other coffee shops could also be attributable to increased use of  the company's mobile app, which lets people order in advance through their smartphones and more quickly pick up their coffees from a location.

But Solomon noted that it wouldn't explain some other trends, like fewer police citations for public urination. The study found a decrease in citations for public urination near Starbucks locations compared with other areas, suggesting that Starbucks' open-bathroom policy is providing a solution to a public health issue.

The decline in visits relative to rival stores was most pronounced around homeless shelters,
declining 8.3% for stores located within about 1.25 miles of shelters, compared with 4.5% for those at least 6 miles from shelters, the study said. That suggests some customers may be avoiding Starbucks in favor of rivals because of a "preference against being around populations attracted by the policy, such as the homeless," the study noted.

But, they added, "Even increased use by the general public of bathrooms and tables is estimated to have negative impacts, partly because people who might have previously felt compelled to make a purchase in order to sit or use the bathroom now no longer do."