MCD was once a beaten-down stock, too (so maybe there's hope for SBUX)

About six years ago,  McDonald's stock sank to $12. Talking heads and pundits everywhere declared the burger chain's business model expired, and complained that the company had opened too many outlets. They pointed to increased competition and MCD's lack of focus on what its customers really wanted on the menu. Sound familiar? (Oh, McDonald's stock is now close to $60.) (Read the BusinessWeek story)

Comments

[Gopha Cureselph]

HAHAHAHA

[gopha Cureselph]

All this pessimism for what? The future isn't written. Starbucks partners can write it. They need to shit or get off the pot. Stop complaining and get to work. If you find yourself unable to work for the company w/o griping to no end, then go find a new F'in job asshole.

[Northern Latte]

Well, hopefully all of us who want to be on this ride carving out the history of this company stay faithful, work hard, and believe, and we'll too come out a success story in a few years. If you don't want to try then get out of the way and make room for potential new partners to help us who do want to succeed so they have room to come on board....and buy stock now while it's low because you could be sitting on a nice little nest egg in ten years!!

[Gopha Cureselph]

Agreed Northern Latte.

[DallasSM]

When we turn this thing around in the next few years, I look forward to calling up all the people who have told me that we are doomed and laughing. As long as people in my position and every level of the company step up to the plate and take ownership of each and every store in the company, there is no way we can fail. I believe we will do it or I wouldn't still be here.

[Darleen]

Well, hopefully all of us who want to be on this ride carving out the history of this company stay faithful, work hard, and believe,

Well said Northern Latte. Well said.

[smokey]

FELLOW PARTNERS: finally, i'm reading some positive posts!!! about time!!!!enthusiasm is contagious. i too believe in STARBUCKS!at my store, business is good, music is loud and lively, laughter is allover the lobby, partners are focused, customers seem appreciative for some positive changes with "their store" it is truly "their" THIRD PLACE! focus on the good, that's when you bolster your enthusiasm and passion!!i say onward howie and long live spoodling! now go out and have a spoodle of a day!

[Peaches]

I work really hard when I'm on the clock, and I truly want Starbucks to succeed and to be different, but oh my god, I will work harder in order to stop hearing people compare Starbucks to McDonalds. Have you ever been into a McDonalds? People just assume that because people want their beverages fast, and we have so many stores, that we're comparable to a fast food chain. Thats way off the mark. The differences between the two companies are astounding. You think McDonalds employees show the same passion for their jobs as Starbucks partners do. Does McDonaldsgossip.com exist? No.

Also, if you complain to us because we took too long making your latte, we don't fire 9 rounds into your car.

that last part is in jest. kind of.

http://consumerist.com/383751/mcdonalds-employee-wont-let-you-have-it-your-way-++-shoots-you

[Lynette]

As a long time customer, I WANT Starbucks to succeed. I'm looking forward to the new espresso machine (Mastrena?) and the Clover. I love the new Pikes Blend and can't wait to taste my first Mint Mocha Chip frappaccino (sp?) since 2005.
Keep going, Howard, your core customers are with you.

[Melody]

I love that positive post Lynette! YES!
Howard I'm on your side too! :-) Onward! You're my hero.

(Though please back more bold choices of coffee during the day. ;))

[StLouieDrip]

Does anyone know what McD did do turn itself around? Like what percentage of its restaurants were eventually closed? And what percentage of employees were let go? And I know its menu has been criticized, but I also know the "core" hamburgers are still there, and they still taste just the same as they did 30 years ago.

[Terry]

Good news.
I will never sell my SBUX! :D

I also want to be part of this road back to success. After MBA I intend to look for a job with Starbucks.

[Mal]

I got 10 shares of McD's for my 13th b-day in 1975, about $100 my parents told me years later. I cashed my $.50 dividend checks for a few years until they began the dividend reinvestment program. Well, over the years of reinvesting, and many stock splits, I cashed out about $12,000 in 1994 to buy a bigger house for my expanding family.

Sbux stockholders have to think LONG TERM. Be patient my caffeinated friends.

[mikey]

And on top of this to make McD's bad... the movie "SUPER SIZE ME" didn't help it's cause. Especially the month old french fries still looked the same... no mold. At least SBUX doesn't have this much negative publicity.

[LilBarista]

I think this just shows that any company may go through a bad time like Starbucks but it doesn't mean it will stay like that forever. And as a partner for 4 years, I want Starbucks to succeed too and I think with time we will.

I must say my outlook on this company has changed so much in the past couple months. Seeing all these changes for the better is exciting and I'm proud to be a part of it. I love my job now more that ever.

While soo many people are negative about their experience at their local Starbucks, the store I work at, honestly, is different. I go to work and try to give 100% everyday and many of my fellow baristas do the same. We have sooo many regulars that come in EVERY single day, sometimes three times a day, that we know by name, we know their drink, we know where they work, we know their family... we've even been invited to their weddings! Just today two customers were talking in the cafe and they told me how much they love coming in there..how they couldn't get such service anywhere else. And I think we are just as busy as ever...tips are still higher than ever. Maybe we are just in some bubble seperate from other Starbucks, but I highly doubt it. I know there are other good ones out there too. And I know there are many customers that DO appreciate what we do, and DO love Starbucks and that are not going to give up on Starbucks or ever quit coming..... when I think of all that, I CANNOT imagine Starbucks not rebounding from this. It's just easy to forget all of that once you start reading this website.

Now I'm not saying this to brag, but mainly just to show to all you naysayers out there that not all Starbucks are as you have been describing them... and I think with time, once all these changes settle in and with a little rebound in the economy, Starbucks will be doing "good" once again.

I'm keeping my stock...

[Andrew]

How McDonalds turned around was offering premium coffee and introducing more precieved healthy options like the chicken snack wrap.

Starbucks has a far more superior coffee than mcdonalds but what could they do about adding options with more of a percieved healthy lifestyle customer in mind? The Starbucks customer patronizes their store 19 times a month, i am not sure you could increase those numbers, even McD would be jealous of those numbers. we just need starbucks customer to spend more money while they are in the store with a value prop that makes them feel happy about spending that money. i think consistently great food that complements the coffee is the coffee is the key

[that girl]

You sold MCD's stock you had from 1975 and all you got was twelve grand? I made over $14,000 in Starbucks stock in eight years and that was purely what was vested to me based on hours worked, no Stock Investment plan or other bought stocks. I guess now that it is low I should actually buy some more stock outright, I really can't see the company going away. The first store I worked at was across the street from a food bank and down the block from the welfare office. Welfare Wednesdays were the busiest days each month, as people who had lined up for the food bank would treat themselves to venti extra shot mochas after collecting their donated groceries for the week. In history when the economy gets bad people look for escape in movies and alcohol and apparently this generation includes gourmet espresso beverages in that escape. I'm not too worried about the company not being able to bounce back. The stock will grow again.

[JMW]

I am sure Starbucks's stock will grow again as soon as Howard Schultz (or whomever) lays off this conceit about "getting back to basics" and buying Clover machines. The company is just not very well run.

Here's some evidence of that: McDonald's, a low-end hamburger chain, pulls down 12% margins. Starbucks? 7%. And the latter sells coffee drinks for $4/pop.

I can't for the life of me understand that. How can Starbucks possibly have lower profit margins than McDonald's? The operating margin points to a more telling figure -- 10% SBUX vs 25% MCD (!).

Now I may not know much about dark roasting beans from Indonesia, but I do know this much about business -- when your variable costs are ridiculously high and your margins are low, maybe it's time to cut back? In this case, a lot?

Instead Schultz is preaching a long-term vision and blaming the recession. I am sure that the recession cuts into sales, but why does it cost the company so much to make one sale? Somehow I don't think McDonald's will let its McCafe ruin its margins. And since when is SBUX a volume business anyway?

The business will be healthy again when it has a better cost structure. What that entails, I'll leave as an exercise to the reader ....

[sbuxnewbie]

One of the ways McD's turned itself around was by selling off the corporate stores to local franchisees, which also meant many of the company employees lost their jobs.
Yes, some went to work for the franchisees, with much less in the way of benefits and salary, others switched careers entirely.

My SM was a McD's employee with 15 years in when the company sold the stores. The local franchisee was quick to hire her, but she wasn't really happy. She made the move to Starbucks three years later.

Several of her friends were lucky enough to stay with Corporate, and did well - until receiving layoff notices last week. Apparently McD's corporate is down-sizing again.

So, in a nutshell, that's one of the ways McD's reorganized a few years back - get a major cash infusion by selling off assets - physical and personnel.

I'm not advocating such a change - heck, I'm 100% against it, based on many of my experiences with licensed stores. I think our corporate model has the sustainability to work out over time, and we will get there.

Yes, the economy is shaky - this is the first time in my life where gasoline has cost more than milk - and sales are starting to slide. A lot more tall drinks than grande this week, but I get to see my regulars every morning, and they tell me that as long as they have jobs, we're a part of their day.

The smile on my face is genuine, and I'm always happy to share it.

[ap]

Clover Who???

Visited Starbacks in NYC and New Jersey to ask: Do you know any Starbucks store that has a Clover Machine?

Answer: Blank stare? Never heard of a Clover? Do you mean the home brewing machine?

Clearly, corporate is not keeping Baristas up to date on the latest doings. And speaking of which: Where are the outlets with Clovers?

[Barista Joe]

I agree with the fact that we have to be patient and hold on to our stock while it's low, but the key difference between McD's is that Starbucks doesn't have a master plan laid out yet. Yes, they've gone on the uprise since Howard returned, with the acquisition of Clover and other new beverages/features, but it hasn't been consistent- We need to get something going, and KEEP it going (i.e, no more two month rollouts of crappy syrups like honey).

[MusicGal]

Keno-- what? Webmaster, got some spam over here... ^

Aaaand back on topic. Wow, thought I'd open up this thread and find a bunch of anti-Starbucks comments. And look! People are actually being positive! :D I agree, if McD's can do it (blech), then we can do it too!

[SBUXbarista]

I worked at McDonalds for 8 months before comming to Starbucks. McDonalds is cleaner and has (much) healthier food than Starbucks. However, I think communities are more attached to their Starbucks, and are more likely to use it as a gathering place.

As someone said before, the coffee/food market is already way oversaturated. I can get a cup of coffe anywhere. I sometimes have to walk half a block before I get from one coffee shop to the next (ha ha). I kind of like the ratty feel that our local starbucks has, with the employees who yap rudely at each other and at the customers. I hope starbucks sticks with its vision as a "third place," and doesn't try to become another feed farm (there are too many already). Love the Simon and Garfunkel music I hear there at night.

[Bladerunner]

Well I may hold on to my stock, but Wednesday is my last day after 8 years. The reasons...many, but it came down to my paycheck. I've seen my income go down 2 years in a row. And my family comes before Starbucks. Maybe someone in Seattle would like to know why someone with all my experience, and a Black Apron too, is leaving. But I doubt it. Which is part of the problem. And should we be compared to MickyD's? I don't see a dollar menu, or value meals.

[Me]

You guys all sound kind of cheery and I have to admit it's infectious. Unfortunately, here in Canada Starbucks comes more across like a headless chicken. We won't see any pike place soon but have to brew House instead. Our customers (at least here in Toronto) so far prefered the bold over the mild option by far, but the warehouse is restructuring and we won't be able to brew bold after like 1pm until mid may because of supply shortage. What a major glitch! We re Starbucks COFFEE and have to tell two out of three drip coffee customers we won't have his choice on brew for a few weeks. Restructure? Yes! Should the customer asking for core items suffer? NO!!! Heads should be rolling over this. This counterattacks all our efforts to be nice and legendary and get more customers in the store. Thank god frappuccino season started and we can earn some money there.

[Al C]

After spending 2+ disappointing years as a SM for Starbucks. I realized that they cater to and help create complete snobs. The whole "create your own drink" is a DISASTER. The people in marketing do not have to deal with the public & believe me the public is a "trying breed". You have people trying to be as creative as possible. 1 1/2 pumps of this, six pumps of that, half whole milk and half 2%. Complete JOKE. Their so proud of their drink. It just confuses everyone (Calling the drink, Making the drink and upsets EVERYONE waiting on line). I don't think McDonalds would ever veer from their recipe for a Big Mac. They stick to what works, and whether you order a Big Mac in NY or Seatle IT'S THE SAME Big Mac. When you allow ALL the "pompus" out there to disrupt your business & FLOW, your headed for big trouble. Also, God forbid you order the drink in the wrong order. the veteren Baristas treat you like you have two heads. I've seen this first hand in NUMEROUS locations. Starbucks' partners have a "pompus" attitude of their own. The combined problems stated above have added to the MAGOR decline in Starbucks. This can not be blamed on the weak economy. Starbucks is NO longer a cool place. It is an over priced retailer.

[that girl (the other one)]

first: i'm "that girl"! who stole my handle? :)

second: i agree with the person who says starbucks should be healthier. if you want a breve mocha with whip, fine, but i am frustrated with the lack of healthier options, especially at my licensed store. apple bran muffins aren't appetizing, and the reduced fat coffeecake is still not LOW fat.

[Sedg]

"Clearly, corporate is not keeping Baristas up to date on the latest doings. And speaking of which: Where are the outlets with Clovers?"

It's not so much corporate as store managers - it was in the barista information passed around after the aqcuistion, SMs were requested to tell partners about it or print the information out.

As far as Clovers, I believe they're trialling with 3 in Seattle and 3 in...Boston? Maybe? Somewhere like that. I can't see it working. My average drip customer doesn't care if they get whatever coffee of the week is running or Estima (UK Fairtrade), and most of the time doesn't taste the difference. So I really can't see them caring enough about the benefits of clover-brewed coffee to warrant a price increase (which there will definitely be. Clovers cost $12k a piece now, even with *$ economies of scale and mass-production they'll still be in the thousands).

[Bladerunner]

I don't know if the way their "shoring up " the brand is going to keep them solvent during the rising economic problem. The economy is in deep doodoo, and there are not a lot of value pricing type options being given to the Starbucks inclined consumer. Just "we're the best at what we do!" BS being handed out. Duncan Donut started brewing coffee every 30mins, so we had to too! People are looking at savings, making sensible choices. I don't see Starbucks coming to gripes with this looming crises. And yes Wednesday is my last day. So no more bitching, just doing, There will be many missed customer, and more who are not(see story about what baristas want from a customer). And I've made so many great life long friends.

[JaveED]

If Pike's Roast is the beginning salvo in Starbucks' resurrection, we are all doomed!

In essence, Starbucks has "dumbed down" its showcase offering to make the coffee appeal to the widest possible swath of the coffee-drinking public.

This bland offering would be a non-starter but for the fact that in many cases it is the only coffee brewed and even when it is not it is the "go-to" brew that barristers are obligated to serve.

Customers are reacting in two ways: 1) They are explicitly requesting the other brews available, typically a bolder blend with more dimension than Pike's, or 2) They are deciding that if Starbucks wants to offer a Dunkin' Donuts-like blend such as Pike's, they might as well pay 50% less and go to Dunkin' Donuts!

NOT a good first step in the revival of this company!

Thoughts?

[SBUXbarista]

I want to echo what Al C said about these pompus drinks. What the heck is this? One and a half pumps? One percent (rather than 2 percent) milk? Give me a break. I can understand slight variations (can I have skim milk), but this is just plain silly. "Order bar, order bar. Order shaken." Do customers really believe this is value? I wish I could communicate to them that this is kind of a scam. Oh well, I work there, and they do pay my health insurance. I am greatful for that and that distinguishes them from the other food service people.

[SBUXbarista]

I was on the highway today, and I saw the road signs, which included McDonalds, Hardees (blech), Wendy's, and now, to my huge suprise, Starbucks. What are we doing on the highway next to greasy burger joints? What the heck does THAT say?

[Cali ASM]

SBUXBARISTA:
I think that says that Sbux has decided it wants to be a fast food restaurant not a cafe.

[TL234]

Starbucks is floundering for many reasons. Here are a few:

First, they have significantly overexpanded their stores. For instance in a local outdoor mall there are three in less than a square mile. I'm all about market share but three outlets in less than a square mile seems excessive.

Second, as they have expanded they have made huge sacrifices in quality. How many times have you had a teenager just throw a drink at you without any courtesy at all? In some locations I would swear that the local McDonald's has dumped some of their worst employees off for retraining...This has happened to me more than once in a few locations with one huge exception (thanks Shannon). In the early days the Barista would at least engage the customer - even if they were busy for a "hello" or "thank you", some even knew your name...In fact they once had a radio commercial in the DC area with this very concept..."hello X this is your Barista calling..." Now the best you get in some cases is a grunt and the continuance of the story from last nights exploits to the other store staff. Does this remind anyone of Home Depot? Oh wait I can't even find employees there...

Also, what's up with this Pike's Place coffee? Are we being duped into thinking that the coffee is "better" when in reality it is cheaper coffee at the same price?? Something seems very fishy here...How about a good cup of Verona or Sumatra???

Third, what is the darn fixation with McDonald's. Yes they did go through a bit of turbulence a few years back and this seems to be what Starbucks is going through now but why does Starbucks feel they have to compete with them just because they make coffee? Drop the pre-manufactured sandwiches already (I once went into a Starbucks that was burning one and I sneezed for over an hour-no kidding) and get back to the root of the franchise - excellent coffee. Sandwiches and other expanded menu items honestly do not add anything to the already extensive offerings. Second, find local vendors to make the pastries. The quality has gotten horrific. It is more like eating a piece of cardboard than a scone. Finally (and certainly not all) STOP competing with McDonald's. It certainly makes sense that in this business as in sports that one will tend to "play down" to the level of an inferior opponent. Let them make coffee and their greasy cholesterol bombs. If Strabucks wants to be better they have to differentiate the store, brand and products as superior. Make great coffee, great drinks and be a center of community not in competition with an inferior opponent. One of the best features of Starbucks before they overexpanded into smaller stores was you could sit at a table or in a chair and relax or chat with a friend or business associate (one of the best is in 30068 zip code). In some stores it is just too cramped to do this. Yes, McDonald's has ample seating and free Wi-Fi with your heart attack but it is hard to impagine the smell and grease in the place permeating your clothes and laptop.

Bottom line is Starbucks is not dead and does not even need to be saved. They appear to be in a stage of teenage angst more than anything. They simply need to FOCUS on what has and will make them great. Coffee, Customer Service and Community!