Enough with the Coff ee Shops Already

Enough with the Coffee Shops Already!

Coffee Shop Overkill Reaches Epidemic Levels in Bongseon-dong

Written by William Urbanski

Do you like a nice warm cup of coffee? Yes? Me, too. Do you need one after every fifty meters you walk? If so, then you should come to Bongseondong where on a single five-hundred-meter stretch of road there are no less than ten coffee shops. This is not including a certain side street where there are four coffee shops back-to-back-to-back-to-back. I think I speak for all of humanity when I say enough is enough of these coffee shops already.

The coffee shops in question are definitely not rinkydink operations. They are full-fledged, fancy-dancy establishments with seating for at least fifty people each. Every single one of these will not hesitate to serve you up artisan coffee in a fancy cup alongside a tiny slice of diabetes-inducing cake that you can eat while vegging out on a comfy chair with your eyes glued to your smartphone and occasionally schmoozing with your bestie.

All issues about price, health, and lifestyle options aside, what really grinds my gears about this endless proliferation of coffee shops is that each and every one is a lazy excuse for a business idea, pure and simple. As well, instead of innovating, all they do is straight-up copy and paste the same old idea, flooding neighborhoods with generic, unnecessary businesses. and streamlined research (i.e., Google) reveals that not only is clustering of businesses nothing new and the subject of at least one well-known economic model, but there are compelling historical, social, and even religious precedents that say putting similar businesses that close together is just plain wrong.

A Tale of Two Pizza Places

The New York Times reported an incident from a few years ago that can only be described as the definitive

display of businesscopycat-syndrome. In a Jewish neighborhood of Manhattan, a pizza shop (let us call it “Pizza Shop B”) opened directly across the street from an established pizza restaurant that had been there for years (“Pizza Shop A”). Pizza Shop B basically copied A’s recipes, had much lower prices and was even alleged to be encouraging customers in line to come across the street. Now, even though B was within its legal rights to open and operate the business, it was clear as day what it was doing: trying to steal A’s customers. Pizza Shop A appealed to a rabbinical court, citing certain Jewish religious texts that prohibited unfair competition by a new and nearby business. Long story short, the tribunal issued a ruling, in Hebrew, and sided with A saying that the new pizza shop violated rules laid out in Jewish scripture. Whatever your views are on extralegal religious tribunals, what should be striking about this example is that there are clear historical and religious norms that prohibit replicating a business’s concept and appearance and then opening up across the street.

Business Clustering

Admittedly, similar businesses clustering together is nothing particularly new, but the first time it really stood out to me was on a visit to the magnificent Nami Island in Gyeonggi Province. There are two ways to reach Nami Island: by amazing zipline and by ferry, both located at the harbor area, making it more or less a bottleneck with one road in and out. The harbor area is flush with all the usual businesses, such as convenience stores, and it even has some games and a bungee jump tower with a dubious safety record. This whole area is pretty compact (roughly a kilometer long) and what really stands out is the ridiculous number of takgalbi (marinated and grilled chicken) restaurants in the area. I kid you not, there have got to be ten almost-identical restaurants in the same place, all with similar menus and seating areas. When I asked my wife why they needed so many chicken joints in the same place, she said the area was well known for takgalbi, so everyone nationwide was aware that if they ever had a hankering for some roasted bird, they knew where to get it. Simply put, the area was known as a chicken hub (I cannot believe I just wrote those words). I will admit that there is a certain logic to this, but it still strikes me as businesses telling the customers what they want instead of the other way around.

Because I just could not let this whole thing go, I did some research on the matter (i.e., watched some YouTube videos) and came across a TED Talk video that explained business clustering pretty well. It used the example of two ice cream vendors on a beach. Assuming equal numbers of customers enter onto each part of the beach, the best place to place the ice cream carts would be equal distances from the middle. Now, if one day a vendor came early and positioned himself closer the middle, he would attract a disproportionate number of customers. What vendor number two has to do in this case is move his cart to get more customers. There is a little more to it than this, but the long story short is that this jockeying for position will continue until the vendors reach a point of stasis in the middle of the beach where they will, in theory, attract the same amount of customers. This location, in which each vendor cannot improve his position by moving his cart, is known as the Nash Equilibrium (Nash was the Nobel Prize-winning economist and mathematician who was the subject of the fantastic movie A Beautiful Mind, starring the bad person Russell Crowe).

This is all well and good and the economic logic seems feasible to me, but if we can take a break from theory and move back into the real world, we can see a bigger problem. When businesses encroach on each other, they do it to steal customers or prevent their competitors from “winning” and not to better serve the customer. The result of this is ten chicken restaurants on the same block.

Coffee Culture

The Nash Equilibrium comes about from businesses competing with each other. Where businesses finally settle is based more on stopping their competitors from gaining a competitive advantage rather than what is good for the customer. In the case of Bongseon-dong,