Starbucks to get rid of warm breakfast sandwiches

Howard Schultz made the announcement in his Wednesday conference call with analysts. "The scent of the warm sandwiches interferes with the aroma of the stores," he said. (Boy, is he right!) Stores will still offer warmed pastries. (Associated Press reports the no-more-warm-sandwiches news.) || You can listen to a replay of the call at this link.

** The warm sandwiches "are going to be out by year's end." In the meantime, they will be "de-emphasized."

** Serving sandwiches got in the way of employees' "ability to make the perfect shot of espresso." In other words, spending time on sandwiches took away from the focus on coffee.

** The sandwiches will be replaced with "a breakfast menu that delivers what our customers are asking for."

** "We're going to be in the lunch business; we're going to modify it."

** "We are bringing back our annual leadership conference." There will also be open forums for all partners.

** Re the $1 short coffee, Schultz reminds analysts: "This offering is just a test."

** Schultz also notes that "it has only been three weeks since we made leadership changes, but we have made significant progress."

** Although underperforming stores are being closed and new-store growth has been slowed, Starbucks is still a "growth company," says Schultz.

** Detailed turnaround plans will be disclosed at the March annual meeting.

Comments

[David]

Dear JoAnn,

I write to you today because the smile on my face from this morning's Starbucks "Reduced Fat Turkey Bacon" sandwich is quickly eroding. I learned late last night about Mr. Schultz's initiative to axe all hot breakfast sandwiches from Starbucks coffee houses in a campaign to win back customers. Besides selling Coldplay albums out of your stores, this could be the biggest mistake of Mr. Schultz's illustrious business career. I can honestly say that I had nightmares last night in fear that by this time next year, I will be unable to walk into my neighborhood Starbucks and smell the aroma of a plastic-wrapped, pre-made hot breakfast sandwich. No, they are not freshly prepared on a McGriddle, but they do offer a healthy alternative to the decadent desserts that are on display in all of your 10 billion stores and counting. In an increasingly health-conscious world, no one can deny the growing demand and popularity of a fiber-rich, protein packed hot breakfast sandwich. To be frank, the hot breakfast sandwich is the best thing going for Starbucks right now. Starbucks coffee, believe it or not, is a distant second, if not third (I do like those marble pound cakes on my sweet tooth days). Whether Mr. Schultz would like to admit it or not, Starbucks competes with Dunkin Donuts and McDonalds. Both competitors offer better coffee and breakfast sandwiches for a cheaper price, and yet, I and a million others still go to Starbucks. As a hot breakfast sandwich expert, I can honestly say that Rachel Ray and Ronald McDonald are laughing at this "get back to our roots" long-term strategy. With hot breakfast sandwiches removed from the menu, Mr. Schultz can say goodbye to its biggest revenue generator, and watch his loyal shareholder base rotate into one big "egg mcmuffin and cheese." With a waning stock price already, I'd be willing to bet that the portfolio manager at Sand Capital Management (SBUX's top shareholder) probably choked on his hot breakfast sandwich last night when he learned of Mr. Schultz's initiative. I know this sounds like a joke, but I'm being very serious. Killing the hot breakfast sandwich is not courageous as Mr. Schultz deems - it is just plain dumb, and will result in the ultimate demise of this respected franchise.

Sincerely,

David Loewenthal

[Jenny]

If the breakfast sandwiches go, I will no longer go to starbucks. My favorite breakfast and the only reason I give them my money.

[Mike]

I agree...I am a huge DD fan and I only go to Starbucks to get their breakfast sandwiches. As a spillover effect I purchase bitter, awful tasting coffeee. There will be no need for me to walk into a Starbucks once they stop selling breakfast sandwiches. What a mistake this will turn out to be!

[Acai Products]

SB is kind of in a hard place, they've built the business on coffee, but have diverted from that for a while now. Trying to go back seems the logical choice, but they will likely lose some customers who did like the sandwiches.

[Get Rid of Smell]

The thing with SB, they've buil great business with coffee, then deviated from it by shifting their focus to other things (like sandwiches etc)

Now they are trying to go back to focus on coffee (or at least it sounds that way) but they have already gained a number of customers who likes their "new" brand more and would likely leave if SB tries to switch back to focusing on coffee.

But perhaps the posted above is right and it's just a PR spin, after all, less sandwiches at breakfast+more at lunch still results in the same amount of sandwiches sold. We'll see I guess.