A very, very interesting story in WSJ about Starbucks reported that:
"People close to the Seattle company said they weren't surprised when Chairman Howard Schultz sent a memo to executives on Feb. 14 warning that the chain's growth had moved Starbucks too far from its roots. In the memo, which surfaced on a blog last week, Mr. Schultz lamented the loss of the coffee-bean aroma in stores and conceded fast-food chains and other competitors threaten to steal Starbucks's customers."
Read more here.
Starting out as a coffee shop famous for offering personal touches and drinking experiences to drinkers, Starbucks encounters problems when it begins an aggressive expansion plan.
To ensure quality and ease of management (in technical jargon, to minimize transaction costs), Starbucks needs to standardize and do things, while good from an efficiency viewpoint, that would diminish the unquiness of the drinking experience that it once offers its customers.
The experience of Starbucks seems to suggest there is a negative relationship between number of outlets and the kind of experiences such outlets could offer their customers. More outlets, less of a unique experience offered to customers.
This conjecture seems to be supported indirectly by the fact that when McDonalds decides to offer gourment coffee and compete with Starbucks, the company does not simply sell better coffee at its ordinary outlet. Instead, McCafe is set up for this purpose.