PANIC MOVE?: Reaction to Starbucks' $1 short drip coffee/free refills test

* James Walsh of Coldstream Capital Management tells the Seattle Post-Intelligencer:  "Once you start making your customers cost-conscious it's ingrained in the brand. It's only drip coffee and in test areas, but it's a risky strategy."
* Brand consultant Robert Passikoff tells USA Today: "This cheapens the brand. It says they're scared as hell about the 14,000 McDonald's coffee bars about to open up. It's hard to be a price leader and then turn around and discount. It's a panic move."
* From BusinessWeek: "For a chain known for its $5 cappuccinos, a $1 price promotion cuts to the quick. It smacks of McDonald's and Wendy's neon-bright dollar menus. It's probably the most off-brand move so far."
* I think the $1 short is a good idea; I often order that size in the late afternoon (when I'm nearly coffeed-out) and feel I'm overpaying for the small amount; a buck (rather $1.50-plus with tax) feels about right.

Comments

I should be an analyst. They said exactly what I said when I heard about it. Dollar menu, here we come!

[Andybarista]

Eggs Florentine Snackers $1
"Short" parfait $1
Starbucks Stock Value $1

[Socalsnowbunny]

I hope we don't let arbitrary critiques from investors impact our ability to make decisions that are best for the customers. I have had NOTHING but positive reviews from them. Most have said that this will bring them back more often. It is COMPLETELY within brand concept, and I would say our first progressive promotion I've seen in sometime. We are a coffee house. We want our customers to relate to our core products. By inviting them into our Third Place, and attracting them on price and quality, it will make more sense why our name is Starbucks Coffee.

And even while being progressive, it hits McDonalds franchisors straight in the eye. I can't wait to see how this plays out. I hope it goes national.

[JMW]

These "expert opinions" offer some good proof of why you should never, ever hire management consultants to tell you how to run your business.

[SoCalSnowBunny]

FYI Shares are up 8% on the news...

[Burgh Barista]

People need to chill out. The product being sold for a dollar is a SHORT CUP OF DRIP BREW COFFEE. Like the post says, it's only a 50-cent price cut, and the move is just being exploited for publicity. It's not like we're going to be selling $1 Frappucinos anytime soon...

so... our customers WANT to pay more for coffee just because we're starbucks?

This isn't a dollar menu, panic strategy. I figure it's about time we drop the prices of our drip coffee. We throw so much of it out anyway.

an 8oz coffee $1
a 16oz coffee $2

-seems sensible to me!

[UPod]

From Marketwatch:

Dennis Lombardi, restaurant industry consultant at WD Partners says it's a reaction to "increased competition they're seeing from some of the other suppliers of brewed coffee," especially McDonald's and Dunkin' Donuts. He adds that Starbucks is also "being responsive to consumers' concerns." Lombardi says if he were in charge of marketing at Starbucks, he would say the chain is "being responsive to tough economic times."

[jabanga]

the mcdonalds around here were giving away small coffees in the early am for like two years to get people to try their new better coffees. i think it is perfectly fair to call it risky: i think the big danger is in how far they go with it. when dunkin' donuts originally rolled out espresso and i started hearing we had to compete with dunkin' donuts i thought the rdo and rvp were crazy. starbucks had just been doing what they do and doing quite well. then all the focus went on sweet drinks and drive-thrus and i knew they weren't kidding around: they compromised the brand to compete with dunkin donuts while dunkin donuts was improving theirs to compete with starbucks. this could (and i repeat the word COULD) mark a reactive strategy to compete with mcdonalds which could furhter degrade the brand. OR it could be a smart initiative to give a little perk to customers. only time will tell. if the start bundling drinks with food at a discount you'll know what direction the company is headed in.

[andybarista]

Ill take a number three.

Spinach feta wrap, chocolate biscotti, and a small coffee.

Value size that today?

[John]

This is the marketing 'test' heard around the world and suggests Starbucks is worried about McDonalds and, heaven forbid, thinks it's products might be 'overpriced' after a series of price jumps. These are interesting times...

[fuwalda]

Only Starbucks would would be criticized by the public after testing out a way to DECREASE prices and make things better for their customers. Has our society really become so jaded, or has society just become so anti-starbucks that they can do this and STILL be seen as the bad guys.

It's just weird.

[Lyndie]

All this negative publicity is absurd. I honestly don't feel that everyone understands what exactly we are selling for $1. A short coffee is probably the most overpriced item on the menu anyway. Although I enjoy a tiny cup of coffee now and then, I've always felt a little sheepish handing six ounces of coffee (because they want "room") to a customer and asking for $1.50 in return.

But somehow, for "only a dollar" everything changes. It becomes very easy to be the customer pulling "only a dollar" out of his/her pocket and enjoying just enough coffee to get them going for the day. Heck, I love regular coffee. I'd visit the store twice a day for the dollar drip, and I just might buy something else once in a while.

[Vicki Verona]

Just want to point out that a message was posted on the portal today. I'm paraphrasing here, but basically, they didn't anticipate the media making such a big deal out of the test. So just in case a customer asks for a $1 short drip at your store, you are supposed to JSY.

[Starbarista]

Even at $1 it still ain't worth a crap! JSN to selling and drinking the sewage we call coffee!

[SoCalSnowBunny]

I love our coffee, especially Yukon, Casi Cielo, and I'm really enjoying the Columbian black apron that's out right now.

To each their own.

[barista jack]

Someone, please explain to me again about this $5.00 cappuccino, that business week states,in addition to many others. I have been working at starbuck over a year now, there is not a $5.00 cappucinno on the menu that I have ever seen, why is it people like to round up when they claim how overpriced we are? Remember your paying for legendary service also.REPEAT AFTER ME... brewed coffee prices are AS FOLLOWS tall 1.75. grande 1.96, venti 2.07

[Seven]

In my area BC is 1.90-2.11-2.28

[BOSTON STARBUCKS REBEL]

There was an action item on the Store Portal about this. What is the SKU for this so I can Just Say Yes?

1$ drip - 1111160
Free refill - 1111161

[mitchell]

1$ drip - 666

[jabanga]

"I love our coffee, especially Yukon, Casi Cielo, and I'm really enjoying the Columbian black apron that's out right now."

i know this peyty and i don't mean to single you out socalsnowbunny but it is a long-standing pet peeve of mine: its colombia not columbia. i can't tell you how many times i had to have people redo the hang tags and cod/cow signs over the years. its not quite as annoying as people spelling espresso expresso but close.

[L]

Hey, we work at Starbucks, we shouldn't know about coffee or it's origins. We just need to know how to push buttons.

[Melody]

[Quote=Starbarista]"Even at $1 it still ain't worth a crap! JSN to selling and drinking the sewage we call coffee!"[/quote]

^ Perhaps you haven't developed the fine palette for it. ;) To truly appreciate your own coffee, use a french press and make yourself a hot, dark cup. The oils and flavor will come out better with the french press.

Don't adulterate your coffee with a lot of half & half, sugar, and other unnecessary condiments.

If you must add sugar, consider taking a tiny bit of your own caramel syrup and putting it at the bottom of your coffee cup.

Drink slowly, and enhale the beautiful aroma just before you take a slip.

Just a few tips from me.

If your feelings about your coffee don't change, consider moving to a different occupation or coffee house chain. If you have read Pour Your Heart Into It, you'll know that Starbucks Coffee is intentionally brewed darker than Peet's Coffee (read the book/long story) : Perhaps you should go there if you maintain such adverse feelings to your own core product.

Best wishes,
Melody - Starbucks Coffee drinker since 1992.
greenapronbook.com

[Starbarista]

Melody, with all due respect, and I do respect you and what you do, it's still not good. I have been drinking coffee as long as you, and have had Peet's among many others. (There's a place in Portland called Stumptown that had the most amazing coffee.) I have a french press at home, and am currently drinking a coffee from another coffee roaster, Zoka out of Seattle. I know good coffee, it's just we don't have it. I don't know what else i have to say. Again, I have read PYHII, and I still feel the same way, and know most of my customers agree. I am going to stay in coffee, just somewhere else. And again, I am NOT a disgruntled TM. I just know we have crappy coffee. Call it what you will, it's not good coffee.

[CP]

Melody, People who think our coffee is crap, probably drink wine that comes from a box and think its good.

[McBarista]

Do you think the new shakes will be "StarShakes (tm)" or "BuxShakes (tm)". The "BS" abbreviation seems like a good idea, but "StarShakes" just rolls off the tongue so nicely.

[Mikey]

McBarista, that's hilarious! No BS there!

[Michigan]

$1.64-$1.75-$1.96 incl/tax in MI

[SoCalSnowBunny]

"i know this peyty and i don't mean to single you out socalsnowbunny but it is a long-standing pet peeve of mine: its colombia not columbia. i can't tell you how many times i had to have people redo the hang tags and cod/cow signs over the years. its not quite as annoying as people spelling espresso expresso but close."

Touche, Jabanga, you are correct. It had to be a significant word like the coffee's origin that I misspell. My sister lives in the city of Columbia and clearly it's spelled differently than the country, Colombia. (The irony is that my sister in law is from Colombia).

In fact, because you pointed it out I'll end up always remembering it now, so lesson learned!

[chitown's best/angriest barista]

Andybarista, you crack me up, and you speak the same truth i'm thinking.
personally i'm not too fond of our coffees either, i have to sweeten it quite a bit, and i've been known to drink other stuff black. this does not mean i have bad taste, just different taste. and for the record, wine from a box is atrocious, even for broke college kids.
in other news, i have found a starbucks i am completely in love with; the one at Clark and Hubbard in chicago. the store is lovely, it looks nice inside and out, the partners are great, the customers are actually nice and it's probably the least fast-food feeling bux i've worked at. you guys rock.

[SoCalSnowBunny]

"I have been drinking coffee as long as you, and have had Peet's among many others. (There's a place in Portland called Stumptown that had the most amazing coffee.) I have a french press at home, and am currently drinking a coffee from another coffee roaster, Zoka out of Seattle. I know good coffee, it's just we don't have it. I don't know what else i have to say. Again, I have read PYHII, and I still feel the same way, and know most of my customers agree. I am going to stay in coffee, just somewhere else. And again, I am NOT a disgruntled TM. I just know we have crappy coffee. Call it what you will, it's not good coffee."

I think we do a true disservice when we call/categorize any coffee or coffee house as "good" and "bad". When we are looking across our customer demographics, they have a wide arrange of preference that's been developed in their roots. I would argue that places like Peets, independents, etc. have a demographic with a much more developed palette, thus they find this blend of coffee to be much "better".

Consumer Reports, however, rated with testers that were good ol American coffee drinkers, and McDonalds comes out as the heralded "choice" as best coffee.

I think the real issue to address is that our industry has always been critized for being a bit pretentious (aka snobby) and it's not just Starbucks lovers...it's Starbucks haters, coffee aficianados, etc.

[Beantownsbuxbitch]

I think that it's a great idea. The short at my store is 1.58, and we would sell a lot more of them for a buck. It would bring different customers to our stores, not just yuppies and suits. If Dunkin customers are coming here cuz its cheaper, we just gained a shitload of new customers. It's all about profitability, and people will buy dollar shorts if we have them. They might even buy a pastry or sandwich to go with it.

If they would only bring back the "SMELL" of coffee, I'd pay full price and come back 3x to 5x a week I used to go Starbucks-now I go MAYBE 1x week. A $1.00 coffee is not going to get me back in the door. I remember 10 years ago I would actually have to go out of my way to go to Starbucks, then couldn't wait to get in the door and smell that great smell,and the the anticipation of that great taste. It was like pure heaven in a cup. Now
Starbucks is everywhere, no coffee smell and I swear the coffee does not taste the same. This really is the beginning of the end of Starbucks. I bet their owned by Pepsi-Co in the near future. This is the time for private coffee houses to take the reins. Starbucks is afraid of Mickey D's they are turning into Mickey D's. Ugh!!!!!

[redbean]

Hey, if we can gain a few enthusiastically satisfied customers by knocking 50 cents off a drink, that's great. I think these people would have went elsewhere for coffee without the price drop and I seriously doubt others will quit visiting Starbucks because they think the brand is cheapened. I've had better coffee but it's certainly not the Mad Dog 20/20 of the coffee world.

I would think a short is too small for most people anyway, but if you're one of the lucky who can bum around inside a coffee shop long enough to get a couple of refills it would be a great deal. And you would probably be more likely to get a pastry or something to munch on. Now if you could just surf the net for free...it would almost seem like a third place!

Bravo! I think it will prove to be a good strategy. I mean I do like my job but it's all about the money.

[SBUXGUY97]

I was surprised at how many people came by the store today asking about the 1$ short brew test. When I asked them where they heard about it, they said it was all over the internet.

[Rocky]

Just wondering if Jim Donald will be joining to McDonald's after Starbucks becomes McDonalds?

[starbuckscard]

Here's what concerns me-
WHAT THE HELL WAS STARBUCKS' MARKETING THINKING?????

To read THE TORONTO STAR- about THE "NEW" SMALL Cup, you'd think that these "SMALL CUPS" never existed before! Let's face reality- THE SMALL CUP IS NOT NEW !!!!! It's just that it has always been discreetly kept OFF the menu board. Anyone asking for one- for brewed coffee- could get one. SO WHAT'S NEW ABOUT THE SMALL SIZE? Absolutely nothing! It's just the price. So why not have OVERTLY added the SMALL CUP to the MENU BOARD, and leave the price as it was? ANY price reduction appears like STARBUCKS is running scared. And what happens when STARBUCKS attempts to raise the price to reflect the reality of providing SUPERIOR SERVICE, and ENVIRONMENT! STARBUCKS ain't no McDonald's McCafé, You pay for what you get. If I want to drink coffee at McDonald's I'd expect to pay less than STARBUCKS- that's just the psychology of McDonald's- it doesn't mean that the coffee is garbage- it's just McDonald's.

[KCBarista]

My RD left last summer to join McDonald's. I don't think McD would want Jim Donald.

[MusicGal]

Guys, guys, guys. You're over-reacting again, just like a week or so ago when they announced we were selling the Naked drinks.
Can you say "promo"? There's no problem with lowering drink prices... Half of you customers were always complaining about "paying $3 for a cup of coffee" anyway, regardless of whether or not you were exaggerating the price. So be happy that you can get 8 oz. of coffee for a buck now!

Just because something costs $1 doesn't mean it belongs on the Dollar Menu.

If we were really trying to compete with McD's we'd sell toys with the kids drinks and hire someone to dress up as a mermaid/siren as our mascot. Just take a deep breath, everyone, it's going to be okay.

[Seven]

I like the adding the short cup to the menu idea..

[itsnotamermaid]

if someone is going to dress up as the siren, can the costume PLEASE be based on the original logo--including the pot belly and nipples?

[Stacy]

The radio stations down here in Louisiana are announcing this $1 thing. The media is notorious for giving out misleading info about Starbucks. Instead of having someone smart enough to read further into the statement that it was a test idea in Seattle and that it was for the short cup of brewed coffee, the dumbasses on the radio announced that it was nationwide, it was a "secret" deal that you had to ask for and that it was for a Venti sized drink of anything.

This type of crap makes me wonder why I'm in school for mass comm.

[Lance]

BC 1.55 - 1.75 - 1.85 in Los Altos, CA

(interesting-- some of the priciest real estate in the country, but among the cheapest starbucks drips!)

and the beauty of the just say yes policy is that people CAN ask and get whatever they want for a dollar!

and something being $1 does actually mean it belongs on the "dollar menu", hence the name...

[Juicy]

Headache. Once again.

The action item stating that we should JSY for the $1 Short Drip is just for that, nothing else. Starbucks does not care what radio stations have said about getting free on the down-low Venti drinks. They have stated that if a customer comes in and wants a $1 short drip coffee we can give it to them. We must explain to them that it really isn't an official thing yet but we will still be more than happy to give them the $1 free short drip for the confusion.

We don't have a Dollar Menu and we never will. Nobody can put anything on a Dollar Menu if they don't have one to begin with.

[COFFEEMASTER]

My response to the 1 dollar short, is i know nothing about short coffees for a dollar. Sorry you will have to pay the price that it has always been.
Heck if we can just say yes on our prices why not sell a Rialto for a dollar. Until SBUX comes out and puts something on the portal that tells me to sell shorts for a dollar i dont think i should have too. Yeah i read the emails from the DM and RM, but it says that it is for a select area north of seattle, not everywhere! Free refils that is a joke too!

in other news, i have found a starbucks i am completely in love with; the one at Clark and Hubbard in chicago. the store is lovely, it looks nice inside and out, the partners are great, the customers are actually nice

That's the same thing you said about your last store, you said the managers were awesome, they actually WORK, then a few months go by and you hate it again. I think it's just time you cut the green apron strings and move on.

[Mark Harris]

Funny how folks put the "word in the media" above all else.

I'm sure its uncomfortable to catch employees off guard, but I think customers are out of line if they come in and shove a newspaper article in someone's face and demand "where's my $1 short".

No harm in asking, but no need for the obnoxious and demanding behavior.

When its ready and real, I would expect the $1 short promotion or test will show up on a menu, and the employees will be informed (I would hope, at least).

Mark

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