Why is Starbucks drying up south of river?

The northern suburbs felt hurt to be the last place in the metro area to get gourmet coffee shops -- and the hardest hit by far when Starbucks started mass closures of its stores over the past couple of years.

But with the shutdown this summer of a Starbucks west of Burnsville Center, the south has now quietly lost almost as many.

Indeed the freestanding Starbucks -- excluding mere counters inside supermarkets and discount emporiums -- is now all but extinct south of the river.

Much as the company has stressed its social importance as a community gathering place, the few that remain here rely heavily on drive-through business and are located near the entrances to busy highways. Burnsville has lost as many stores as any city in the state.

Is this a damning judgment by an iconic chain? Or perhaps a sign that local competition is too strong? Or is something else at work?

The company says it doesn't discuss store-by-store decisions.

"We used several criteria to identify stores for closure," said a company official who declined to be quoted by name. They included, he said in an e-mail, "stores that were not profitable at the store level and that the company projected would not provide acceptable returns in the foreseeable future.

Industry sources agree, however, that it's pretty clear what's going on just by watching what the company does.

"Not having a drive-through hurt 'em," said Johanna Hanssen, co-founder of the independent coffee shop/wine bistro, Jo Jo's Rise & Wine, of a Starbucks that closed near her in Burnsville's Heart of the City. "A former student of mine works for a Starbucks that has a drive-through," she said, "and they're doing great business there."

Closures are taking place at strip mall outlets without drive-through windows -- a hint that, in a relatively low-density commuter suburb that empties out during weekdays, there just isn't enough settle-into-the-soft-chair business for most of the day to make a living.

Another problem for the south metro area, said Chris Eilers, CEO of the competing Dunn Bros. chain, is the implosion in residential development.

"When Starbucks opened up in suburban markets," he said, "a lot of housing was on track to be developed -- but then all of a sudden the economy stopped. They were too early into some of these markets.."

The other states with comparable kill rates have low-end demographics: states such as Arkansas. And the reason Minnesota is numbered among states like that, Eilers said, seems obvious: The company was trying to move in on the turf of locally based Caribou, arguably the nation's No. 2 player in the industry.

"The Twin Cities is an anomaly," he said, "because it's Caribou's home. Caribou went out and built out a market before Starbucks could gain a foothold. That morning-coffee pattern, once established, is hard to break. In other places they established the market; here, they were the second one in."

A reporter in line at the bagel shop next to the most recently closed Starbucks in Burnsville, a day or two after the shutdown, overheard customers and bagel shop counter workers agreeing that Caribou's north-woods-cabin vibe is more appealing to Minnesotans than Starbucks's "fancy" décor, with its Euro touches and its high-backed living room chairs.

If so, however, that may be truer in suburbs than in cities: Starbucks has only closed one outlet in all of St. Paul and Minneapolis, but a long list of them in suburbs and small towns.

A telling countertrend in the suburbs has been one that combines coffee, wine, and hot meals, not only at Jo Jo's but at the more recently re-opened Depot in Savage.

In Uptown Minneapolis, she said, teeming with foot traffic at all hours, "you can have all kinds of coffee shops within five doors of each other and all seemingly doing well. But here you have to make sure you fill all the hours of the day."