Unhappy Donuts

Happy Donuts is the biggest P.O.S. institution on the planet. By contrast, the Stanford Avenue Starbucks is just the dumbest P.O.S. institution on the planet. These are subtle distinctions, so let me explain.

The Stanford Avenue Starbucks, as many people around here know, has an unfortunate parking situation. And by unfortunate, I mean completely f'ing stupid. They never have enough parking, and today they lost my business for that reason, even though there are plenty of (unusable) spots right outside--but we'll get to that. Then *later* in the day (this evening), they lost my business because they didn't have enough seating.

The Coase Theorem ought to take care of this situation. According to Wikipedia (where else?), "The [Coase] theorem states that when trade in an externality is possible and there are no transaction costs, bargaining will lead to an efficient outcome regardless of the initial allocation of property rights."

Don't worry about the "in an externality" part. The point is that regardless of the initial allocation of property rights, interested parties will end up negotiating for the most efficient allocation, barring any obstacles like transaction costs that might get in the way. In this case, the theorem is relevant because there are *always* a TON of empty parking spaces right outside the Starbucks that "belong" to other institutions next door. I'm not sure which ones exactly, but I know there are a BBQ store (grills, charcoal, etc.) and an inn right there, and I think maybe someplace I'm forgetting, like a restaurant. The idea behind the theorem is that even if the inn or the BBQ store or wherever technically has property rights in the empty parking spaces, Starbucks should be able to negotiate for rights to those spaces by offering those other places some money for use (or even outright ownership) of them.

Now, one might think that the spaces are actually more valuable to the BBQ place or the inn or wherever than they are to Starbucks, so Starbucks just isn't willing to offer enough to those places to use their spaces. One could imagine, for example, that the net revenue generated on average for use of the space is actually more over time for the other places than it would be for Starbucks. So, for example, if only one person parks in a given space owned the bbq place per hour, but each person who does buys a $200 mini grill that's marked up 100%, thereby generating $100 per hour per space for the BBQ place, then that may be more than Starbucks would generate even if 5 people per hour parked in a space, bought a $5 cup of coffee each, marked up at 500%, thereby generating $20 per hour per space for Starbucks.

If that's really the case, then fine. But I can tell you from empirical observation that those BBQ spaces are empty *all the time.* And furthermore, the BBQ place ought to have a pretty good sense of the variability of its customer arrival rate (how many people buy a mini grill between 8 and 10 a.m. on a Tuesday morning?), meaning there ought to be at least some negotiation possible for those times when customers are going to Starbucks but not the other places. Granted, it might require some big, funny signs, like "THIS SPACE BELONGS TO STARBUCKS FROM 8 TO 10 AM MONDAY THRU FRIDAY AND AFTER 6 PM MONDAY THRU THRUSDAY. ALL OTHER TIMES THIS SPACE FOR BBQ PLACE ONLY." But how high of a transaction cost would that really be? And ok, you might still need security people to enforce something like that, but, as noted below, they're clearly doing that already.

Similar considerations would go into negotiating for more space on the lot to expand, but that gets a little more complicated and probably isn't worth getting into here.

Anyway, as far as I can see, nothing like this is happening. Instead, I have been shooed away by the security guards on several occasions when trying to park in the non-Starbucks spots. What's funny is I'm pretty sure they shoo you away even before you get out of the car, meaning they *assume* you aren't going to whatever place the space is reserved for.

Of course, it could be that this is just a negotiating tactic on the part of the other places to make Starbucks offer more. If it's obvious that there's high demand for the spaces, then Starbucks could have a harder time offering a lower figure. So maybe this is all just a charade, and the deal will close eventually.

But in the meantime, it means I am typing this at Happy Donuts. And Happy Donuts sucks. BIG TIME. It's just depressing and awful. I'm not sure which is worse, the one here or the one by Caltrain and the stadium in SF (I've been to both), but they both suck. I think this one is worse, because at least in SF you know there are other places you *could* go if you weren't hanging out waiting for Caltrain (btw, if it's open, I recommend the Borders instead). But here in the South Bay, Happy Donuts just reminds you of what a complete and utter cultural void you live in, filled with nothing but meaninglessness and stupid business that can't learn to sit down at the negotiating table. I mean, remember, this whole post is about how much I'd rather be at a *Starbucks.* And that is just sad.