Starbucks' open-bathroom policy is hindering traffic to the shops, as research suggests people were less inclined to visit the coffee chain because of its overcrowded lounges and bathrooms, according to a study.
Umit G. Gurun from the University of Texas at Dallas and David H. Solomon from Boston College estimated that attendance at Starbucks decreased by 6.8 percent compared "to other nearby coffee shops and restaurants" since the chain changed its policy in May 2018, their report on the study explains.
The decrease won't show up on public disclosures, because those filings do not take into account the attendance rates of nearby coffee shops, according to the report. Gurun and Solomon used cellphone data obtained from more than 10 million phones from January 2017 and October 2018. They were able to trace the monthly activity for approximately 74 percent of the nation's Starbucks.
"The decline in visits is around 84 [percent] larger for stores located near homeless shelters," the report states. "The policy also affected the intensive margin of demand: remaining customers spent 4.2 [percent] less time in Starbucks relative to nearby coffee shops after the policy enactment. Wealthier customers reduced their visits more, but black and white customers were equally deterred."
In its fiscal fourth-quarter earnings report, Starbucks reported a 6 percent increase in sales at U.S. stores open more than a year.
"As evidenced in our recent earnings report, customers are visiting Starbucks at record numbers," a Starbucks spokesperson told FOX Business. "Rather than tracking cell phone data without user knowledge, we see real customers in our stores and the connections they make with our partners (employees) every day across more than 31,000 stores."
The coffee giant made the open bathroom policy change to allow for people to go to Starbucks, use its restrooms and sit in the lounges, regardless of whether or not they made purchases. It was put into effect after an employee at a Philadelphia Starbucks called the cops on a pair of black men on April 15, 2018. The men, who had not bought anything, allegedly would not comply with the worker’s demands to leave the store.
"These results show the difficulties of companies attempting to provide public goods, as potential customers are crowded out by non-paying members of the public," the researchers wrote.
In addition to the change in policy, Starbucks also hosted sensitivity training on May 29, 2018.
"These results suggest that the new policy has been costly to Starbucks, particularly in locations closer to homeless shelters," the report continued. "Indeed, the decline in total visits likely understates the effect on the number of paying customers, as it seems probable that at least some of the new visitors are now coming in to use the bathroom without making a purchase, and yet even with these included the total number of visits is lower."