Our bike club just gave 13 Wally World bikes to Angel Tree. They were all single speeds with coaster brakes. If we had gone to the LBS, even at his cost, we would only have been able to give out 4-5 for the same cost. (He did donate the helmets, btw)
I personally have bought numerous "Box Store" bikes for my kids and they are all still working just fine. When my kids are old enough to be serious about it, they can get a nice LBS bike. My 10 year old will be getting his first "real" bike for his next birthday.