Starbucks Smells the Coffee
- This was posted on June 17, 2009
Two years ago I wrote extensively about how Starbucks had undercut its brand experience to rapidly grow the number of outlets. I warned that degrading the customer’s sensual interaction with coffee beans and the espresso making process would open the door to low end competitors. Sure enough, McDonalds and Dunkin Donuts, among others, are making a strong play for high-end coffee drinkers who have been held captive by Starbucks, Peets and local coffee shops.
And Starbucks gave them plenty of ammunition. Specifically, in its desire to cut costs of opening new stores, the comapny had lost many of the core experiences that made Starbucks a Starbucks. Walking into an outlet, you did not get the wonderful aroma of freshly brewed coffee beans. Baristas were placed behind high counters with espresso machines that were fast, but not particularly fun to watch. Artistic flair was replaced with functional speed. In an internal memo to his managers, Howard Schultz had himself complained that the aroma and theatre that had originally catapulted Starbucks into the world’s premiere coffee house had been lost.
Facing this increased competition, Starbucks is bringing back the core Starbucks experience. Hurrah! Beginning next month, baristas will grind fresh coffee beans each time a fresh pot of coffee is brewed (currently they grind the beans once in the morning). Based on how busy the shop is, baristas will brew fresh pots every 8, 12, or 24 minutes, switching to different varieties so that customers won’t have to be disappointed when they request a particular blend. Espresso will once again be made with flair, the hiss of steam filling the air. Will it slow down the process? Probably. Is this a good tradeoff? Absolutely. Speed and efficieciency is not a battle Starbucks is going to win with McDonalds or 7-Eleven. More importantly, it’s not as relevant to the customers as the true coffee house experience.
Investing again in a superior customer experience is a wise brand strategy. Managers focused on quarter-to-quarter results would have been tempted to dumb down the Starbucks experience, perhaps offering a sub-standard cup of “everyday espresso drinks” to match the price of the fast food giants. But Howard Schultz is adopting a high road strategy. To some this may be counterintuitive, given the current economic downturn. To me, it’s right on, and will position Starbucks for growth as the economy recovers.
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