Austrians give Starbucks a bitter business lesson

VIENNA, Austria — It seemed so brash and, to many Viennese, so American when Starbucks arrived three years ago bearing Frappuccinos and caramel macchiatos into this proud capital of coffeehouse culture.

The coffee chain established its beachhead on prime real estate across from the famed Hotel Sacher and the Vienna State Opera. And this, said the management, was only the beginning. Starbucks would open a new store at least every month. By 2005, there would be 60 locations across the country.

But here at the dawn of 2005, Starbucks’ Austrian empire stands at just eight stores in and around Vienna. That’s down from 10 — two didn’t make it, including one at a high-profile spot by the Naschmarkt, Vienna’s beloved central outdoor market.

The perceived travails of what one newspaper called the “U.S. paper-cup store” have inspired no small amount of “schadenfreude.”

“We don’t want to burst out in unrestrained coffeehouse chauvinism here,” said a recent commentary in the daily Die Presse. “But a little satisfaction that not every standardized global chain can just take over the Naschmarkt is allowed.”

Starbucks arguably has done little to inspire such gloating. It hasn’t driven local coffeehouses out of business. It doesn’t advertise and, aside from the hype of its grand opening, has turned out to be a relatively unobtrusive presence in the city.

Nevertheless, for some Vienna cafe partisans, the American chain symbolizes the insidious creep of globalization. The traditional coffeehouse, in this view, stands as a noble bulwark against the uniformity brought on by mass culture.

“Individuality is the core argument for the coffeehouse,” said Tobias Leibetseder, a patron at Cafe Jelinek in Vienna’s residential 6th District. Table mate Angelika Karner said she had never been to Starbucks and wasn’t planning to do so.

“It is just too American for me,” she said.

The Viennese coffeehouse, almost by definition, offers free newspapers and an oxygen supply severely compromised by the fug of cigarette smoke. The coffee is brought to the table — ideally, by a surly, tuxedo-clad waiter — on a small silver tray, accompanied by a glass of water with the coffee spoon balanced on top.

Cafe Jelinek is one of thousands of coffeehouses playing a cherished role in the life of the city. Its patrons, including an American, recoiled at the idea of a chain coffee house.

“I refuse to go to Starbucks,” said Alys George, a Stanford graduate student living in Vienna. “They are so generic. They all look the same.”

George can be found in Cafe Jelinek several times a week, working on her dissertation on turn-of-the-century Austrian literature.

“You can come here, and to most of the coffeehouses in Vienna, order a coffee, sit for four or five hours, read the paper, and nobody cares,” she said.

In this context, Starbucks’ offer of a “third space” between home and work appears redundant.

“It’s a difficult market. It’s not like in the States,” said Peter Aigner, who handles marketing for Starbucks in Austria.

Coffee-to-go gets a bad rap, Aigner says, and many Viennese persist in believing, falsely, that they will be forced to drink coffee out of a paper cup, even in the store.

“They also compare it with fast-food chains, where you go in, eat quickly and leave,” he said. “The typical Austrian just does not have America in mind when he thinks of coffee.”

Cheerful, clean-living Starbucks may also be at a disadvantage in that, unlike Viennese coffeehouses, it serves no alcohol. It also bans smoking in this city where few restaurants even have a no-smoking section.

But Carl Hauch, managing director of Starbucks in Austria and Switzerland, says the no-smoking policy has won the chain a following.

“We are almost an oasis for a lot of people,” he said, “especially young mothers with children.”

Hauch, an American who took over in October 2003 after a series of management changes at the top, wouldn’t comment on Starbucks’ erstwhile ambitions.

“Our sales are up strongly; we see the business growing,” Hauch said. “Some of the customer comments show we are meeting some needs.”

He called the closure of the two stores in Vienna “a real estate decision, not a comment on potential success.”