Schultz says McDonald's and Dunkin' Donuts aren't selling "premium coffee"

Starbucks isn't losing customers to the fast-food joints, says CEO Howard Schultz. "There's a downturn in the economy. As a result, people are coming in less often than they did a year ago. But we control our own destiny. And what we strongly believe is if we take care of our customers, produce the kind of product that is distinctive, and exceed their expectations, we're going to be in great shape. But we're going to couple that with relentless innovation that you'll begin to see in the marketplace in the months ahead." (Read the BusinessWeek interview)

Comments

[Ken]

"But we control our own destiny."

Can you control destiny? If it is destiny, then its going to happen right? Can you control it? That phrase has always bothered me.
I tried the new pike places over the weekend. I didn't think it tasted any more "premium" then Dunkin Donuts. I didn't think it was any better. And is not the best coffee I have ever had at starbucks, then again, that, in my opinion isn't saying much. Like being the tallest midget.

[Bill]

The Pike's Place brew is brilliant! It isn't the quality that I choose for myself, but starbucks has captured a market that does NOT typically choose starbucks. The goal of any business is to make money. The is a gold mine for starbucks!

So, they've turned themselves into Dunkin Donuts is what you are saying? Yeah, genious.

[MusicGal]

Well duh, when has McD's had coffee to compare to Starbucks?

Anyone ever have a McD's latte? There free on Fridays during "breakfast hours." I'm thinkin about going down there to try one out.

[Joe Mainer]

Uh, SBUX doesn't serve premium coffee anymore either. That Pike's Place stuff tastes like colored water.

[z]

shultz says they're not competing with mcdonalds or dunkin, but then creates a huge hype over a coffee that tastes *exactly* like mcdonalds or dunkin, presumably in an attempt to win over (or win back) mcdonalds and dunkin's customers... sounds like starbucks is competing after all...

Don't pick on Uncle Howie, he is just doing what he thinks is best for the company. If people want weak coffee like our competitors, then we want to be the one who is giving it to them. Our coffee is 150 times better than anything you will be served at Dunkin or McD's. It is also a hell of a lot fresher; we can assure you that Pike Place Roast was roasted less than 14 days before it came to the store. Can the other two do that? I think not. Will Dunkin or McD's make a French Press of any coffee you want? No,because they don't even have French Presses. If you all hate Starbucks so much, get the heck out of this board. You sicken and disgust the people who truly love Starbucks.

You sicken and disgust the people who truly love Starbucks.

Posted by: | Apr 14, 2008 3:20:03 PM

Is this the type of people that frequent/ work at Starbucks?

If so, your behavior is disgusting and I can't imagine anyone loving Starbucks if they have to deal with you.

Just sayin'.

[ken]

o yeah, well Starbucks sicken and disgust the people who truly love good coffee.

You are right, McDonald won't french press my coffee, you know why? they aren't a coffee shop. will Starbucks make me a cheeseburger?
And honesttly, I don't care if Pikes PLace was roasted 35 seconds before they brewed me a cup of it, it still doesn't taste a whole lot better then a cup I can get at Dunkin Donuts. Fresh crap, although fresh, is still crap.

[Jim Lane]

If you do not recognize "spin," then this is a great example. If people "perceive" that DD and McD are offering premium coffee (relative to whatever they are referencing to), then Schultz is only peeing on his foot by saying otherwise. Perception IS reality.

jim

[Brian]

I totally agree with Jim. This is grade A spin. "There's a downturn in the economy. As a result, people are coming in less often than they did a year ago." And what he didn't mention is that they are coming in to McDonald's more than they did a year ago - 11% in March and most are attributing that to coffee.

Call it what you want, but I find it unlikely that all of a sudden a bunch of Starbucks customers decided to stop getting coffee at all, and at the same time a bunch of people who weren't getting coffee at all suddenly decided to start going to McDonald's for coffee.

[breve]

A company cannot be all things to all people. A company needs to find their
niche. I think Starbucks "did": or Starbucks wouldn't "have been" so sucessful. There will always be something a customer finds favorite about thier favorite place. Look what happened to Mickey D's when they tried being the best burger joint, then the best salad joint, the best breakfast joint. Mickey D's got confused and tried to do all things when really they were doing nothing right. I feel Starbucks is heading in the same direction.
My favorite business model is a hamburger place that we have here on the west coast- "In and Out Burger" and they are best at burgers, fries and shakes and that is all they have on the menu. Their stores are spic and span and they pay thier employess above minimum wage.Great customer service. And they have limited stores...BUT they are very successful...they found their niche. Just folks that want a decent burger and fries. Why doesn't Starbucks get back to thier roots that made them sucessful in the first place and give us a decent coffee (Pike Pike is Puke), clean stores, good service. Why are they trying to be everything. I don't get their business model. Well I don't think anybody knows either seeing their stock is going more in the toilet everyday. And NO it not the economy!

[LilBarista]

"Anyone ever have a McD's latte? There free on Fridays during "breakfast hours." I'm thinkin about going down there to try one out."

Hmmm... just what I want.. the same schmuck that's flippin my burgers, and could care less about coffee or anyone else, to make my beautiful foamy soy latte... Umm..no!

Wow, you guys really saw through the comments in the article! How do you control destiny? Ken is right. If it's destiny, you can't control it!? And I agree with Bill, it is brilliant to offer the Pike Place blend to the customers that appear to be leaving for McDonald's, where sales are up and they are referencing coffee as the difference. So, as "Z" says, he (Howie) is competing.

Finally, Breve said it all. Cleanliness, friendliness, good service, and a bold cup of coffee. That's the Starbuck's we need, the one that existed before the super growth began. That's when everything started to unwind, in my opinion. I love Starbuck's. The coffee is fine - it's not the problem!

[Melody]

Did anyone notice the very end of that interview:

>>>
Q: Has anything surprised you particularly since you came back as CEO?

A: This is hard to do. <<<

^ That's an interesting ending to the interview. It certainly seems like Howard knows this is an uphill climb. I have tremendous faith he can do it, but it is SO hard to do.

Howie I believe in you man! If we kick ass with Pike then how about an increase in wages. Pike will save us all!

ONWARD!!!

[trixi g]

I am not only a Starbucks Barista, but also a 50 plus American who has a wealth of time in the Food and Beverage Industry. I give Kudos to "Howie" for the way he is addressing competetion. Granted, he denies this but isn't that what food and beverage is all about? Give people what you think they should have and convince them it was their idea. I have never worked Corporate and am glad to have this opportunity. Believe me, it ain't that pretty out there.

[StLouieDrip]

I'd like to know if Howard is planning a PPR rollout in Italy?

"We're still not in Italy, though we'll get there at some point."

All of this Howard's return stuff just makes me think that Sbux is admitting they were doing a lousy job for so long. They are saying "our drinks used to suck but now we are acknowledging that and trying to correct it."

I can already see the punning headlines in a few years when the stock sinks to $10 a share: "Howard's End."

[DW]

@breve | Apr 14, 2008 7:07:41 PM
In-N-Out Burger .... mmmmmm ... double-double cheeseburger animal style crispy fries neapolitan shake ... mmmmm.
A great niche it is. Some people try and duplicate it but quite frankly it's in a lot of chi-chi restaurants.
In-N-Out always satisifies. I've never seen an unhappy, gripey person in one. And the service is spectacular!
Now if SBUX would go back to just coffee, dammit, and some bakery stuff to go with it ... then Howie will get people back. If not ... does the Krispy Kreme debacle ring a bell?
Leave the smelly brekkie stuff to McD's and DD's.

[Gary]

Pikes place is awfull. Why won't they brew two coffees in the afternoon so we have an alternative to pikes place. Really stupid policy. I think I am switching to Pete's

[martin]

I just tried the McDonalds Ice Latte. At $1.99 it was great. Tasted quite "premium" to me.
Even better was the coupon for a free espresso drink which I printed out from www.unsnobbycoffee.com.
The only problem was the MacDonalds ambience, but it's really not an issue if you just go in there to pick up a drink on the way to work.

Anyone else actually tried this?

Martin-

McDonald's Espresso drinks not yet available where I live in New Jersey. I've asked a few times.

[david K]

Like Peter Fonda at the end of the movie Easy Rider, Schultz is now saying "we blew it."

He went after the fast money and lost his vision, and with it the soul of his brand. And customers started to look for something else to get excited about. The chain is a victim of their own success: by essentially becoming like McDonalds and Dunkin Donuts it has given people permission to believe that McDonalds and Dunkin Donuts can play on their turf.

Read more at my blog:
http://blog.digsmarter.com/2008/03/22/why-starbucks-is-like-the-beatles-and-its-tough-to-put-the-lightening-back-in-the-bottle/

[dick]

just chiming in......Pike's is DD coffee, which is fine. ..but Starbucks didn't rise to a multi-billion $ corp selling dishwater......at the very least have 2 different brews at all times...trying to shove pike's down our throat is going to topple the company

[MJ]

I want my Almond Mocha!

[Joe]

Wow. As a longtime Starbucks customer who simply buys coffee I am very disappointed in Pike's Place. It is not a better cup of coffee than McDonald's or Dunkin' Donuts. It's weak, and it's not consistent from store to store. Whereas before I might be treated to a cup of Yukon, now I'm lucky to get a properly brewed and timely served (increased wait now with the 30 min. issue), cup of weak coffee. No way is this a premium coffee, my only guess is that is a cheaper blend offered at the same price in order to increase profit. The price should be lowered, since the quality has been lost. Who wants to buy a cup of coffee at Sbux that tastes like a cup from Exxon? I think the executives at Sbux should look at the definition of 'groupthink', as should some of the PP reviewers here....because the emperor clearly has no clothes.

"Well duh, when has McD's had coffee to compare to Starbucks?"

*cough*Seattle'sBest*cough*

Served by McD's - bought out by SB

I haven't yet tried the Pike's - is it just typical SB beans that haven't been over roasted?

See, there is the problem SB faces.
They've programmed a generation of consumer that over roasted coffee is what to expect.

Now, if they stop over roasting, they'll get complaints that they're coffee is weak.

The typical SB customer has the palate of a cretin, so Howie is between a rock and a hard place if he wants to improve quality.

First, he'd have to improve the quality of his customers - good luck there.

What do SB baristas make?

In our shops it's not much above min wage, but tips take it up to $15-20/hr depending on time of day.