How's Blank Street Coffee Doing?

Data on Venture Capital Coffee and Starbucks' struggles in NYC

In the highly rewatchable You’ve Got Mail¹, Tom Hanks is ruthlessly leading the expansion of a corporate book store while simultaneously falling in love with Meg Ryan, who owns a cozy local bookshop that he is driving out of business.

After a brief scan of the Blank Street Coffee CEO’s instagram, I can find no evidence that he is in a similar romance with the owner of a local coffee shop. But I am not ruling it out.

You’ve Got Mail has served as my mental model for Blank Street’s expansion. The coffee chain raised a big round of venture money in 2021 (in part from distinguished Residual Thoughts alumnus Tiger Global) and quickly opened ~40 locations across New York City. It inspired negative reactions for airdropping shops right next to beloved local cafés:

Emerging from an Everyman Espresso shop in Park Slope, Brooklyn, last month, David Lieber, a customer, lamented what he saw as Blank Street’s targeting of a neighborhood standby.

“They opened right across the street from Everyman,” he said. “That’s not a coincidence.”

I share David’s point of view from the above article. I live a few blocks from the Park Slope Everyman, and I am biased against Blank Street because I like small, locally-owned coffee shops, and because Blank Street is aesthetically extremely Bland.

A Bland-looking Blank Street in a beautiful location on 6th Ave in Brooklyn

But, I am interested in their story, and their business strategy actually makes a lot of sense to me. This is my understanding of it:

• They use automated espresso machines, which makes service faster, cuts labor costs, and frees up baristas to engage with customers.

• They do not try to be the highest quality cup of coffee, but aim for good enough at a reasonable price. Blank Street’s CEO: “We don’t need to be the most amazing cup of coffee you’ve ever had, we want to be the really good cup of coffee that you drink twice a day, every day.”

• Their cafés are small and do not encourage lounging with your laptop. They are made to be high-throughput, getting a lot of people in and out quickly.

This counterpositions them nicely against Starbucks, which has struggled to be all things to all people since it’s achieved massive scale & embraced digital ordering.²:

Analyzing Blank Street’s Reviews

I used SerpApi to get the Google reviews for all of the Blank Street locations in NYC. I also pulled the reviews for the closest Starbucks to each Blank Street, and the closest “local coffee shop”³ to each Blank Street location (for example, the excellent Volare is the closest local coffee shop to the 6th avenue Blank Street).

Blank Street’s review trend is interesting — a difficult 2022 & 2023, but increasing throughout 2024, so that its quarterly average rating is now on par with the local coffee shops in the sample.

Starbucks’ trajectory is also fascinating and reflects the company’s recent struggles:

By looking for the phrases that appear in reviews for each of these groups, we can understand some of the drivers for positive and negative sentiment at these coffee shops. I used tf-idf, a common method for uncovering distinctive words or phrases in bodies of text. It surfaces the most frequently used words, and then weights them by how rarely they appear in other texts. So common words like “shop” are downweighted and distinctive words like “frappuccino” are upweighted. The color of the bar corresponds to the average rating for reviews containing the phrase:

Looking at this it seems like Blank Street is…doing well? And Starbucks in NYC is in a pretty bad spot.

The most interesting aspects to me are:

Blank Street baristas are kinda celebrities

“Noa,” “Dylan,” “Arthur,” and “Max” all appear in the top phrases most distinctive to Blank Street. These come from people referring to baristas by name.

I may need to make a pilgrimage to the Brooklyn Heights location to pay tribute to Noa, who seems to possess the charisma of a divine being:

This shows up in the average ratings when you filter reviews for mentions of baristas or employees, and it seems like a key differentiator for Blank Street. Maybe the automatic espresso machines really do let the employees be friendlier?

People like the specialty drinks at Blank Street

Things like “brown sugar cold brew” and “blueberry matcha” dominate Blank Street’s reviews. It seems like Blank Street attracts people who are not coffee purists but want inexpensive, creative drinks, often driven by partnerships with influencers:

While the coffee chain isn’t exclusively drawing influencer-obsessed Gen Z customers, Blank Street is becoming associated with a large share of them. Perhaps no other coffee company, however trendy, has become so closely linked with this niche fan base.  

In these pop ups, customers seem to relegate Blank Street’s core product (coffee, lest you forget) to the back seat. Sure, the coffee is fine—good, even—but that’s not the point. And it’s not necessarily why fans keep coming back for a second cup.

Source

Starbucks’ “policies” are eroding its experience

While people are gushing over the employees at Blank Street, the Starbucks reviews are filled with people complaining about seemingly senseless policies. Customers complain about needing to pay for a cup of ice, or not being allowed to use the bathroom:

I just visited this Starbucks with the 6 year old I babysit, he needed to use the bathroom and we were far from home so I purchased a drink so we’d be paying customers and could use the bathroom. When I asked for the bathroom code the staff said the bathroom was “not for customers.” They really looked a 6 year old in the eyes and said he couldn’t use the bathroom after I repeatedly said he was about to have an accident. Finding a bathroom in NYC is impossible as is, but now Starbucks is denying paying customers with KIDS a bathroom that is clearly fully functional and right there just “isn’t for customers”?? The staff said they were a small location so they weren’t required to have a bathroom. Even if it’s not within their policy to require it, have a heart?

Source

You can even see this in the way dogs come up in reviews:

I am sure that health codes make dogs complicated for Starbucks, and they need to be more risk-averse as a giant company. But it’s another point of differentiation that Blank Street can capitalize on:

This is a hard problem for Starbucks. How do you maintain hospitality at massive scale? How do you make employees feel empowered? Starbucks has historically been innovative in this area, granting employees stock options, providing healthcare and education benefits, and hosting barista competitions. But it’s not working anymore. The new Starbucks CEO is addressing this in his turnaround plan, outlined below. We’ll see how it goes!

My Grudging Conclusion on Blank Street

When I started writing this I expected to see a bunch of reviews dunking on Blank Street for being VC-funded and lame. And there are some of those — 23 of the reviews mentioned venture capital or private equity; this one cuts to the chase:

Venture Capitalist vultures opening chain fake "local neighborhood coffee bar" right next to the actual local neighborhood coffee bars, mooching their hard won clientele, trying to put them out of business.

But that is less than 1% of the reviews. For the most part, people don’t seem to care very much, and they like getting reasonably priced Matcha Lattes from friendly baristas. Apparently the baristas are unionizing, so hopefully they have some leverage and get some of that Tiger Global money.

Thanks for reading. If you liked this, you might enjoy this post on Starbucks or this one on which cocktails you should order.

1. Just watching the You’ve Got Mail trailer will transport you to a simpler time.

2. Starbucks’ stock has been ~flat the past 5 years, and they just hired a new CEO. This podcast episode is an awesome history of Starbucks. The founder Howard Schultz is very blunt in his criticism of the customer experience now that so many orders are digital pickup.

3. This means literally searching Google Maps for “local coffee shop,” which is not perfect but returns mostly independent or small NYC chain stores