OPEN THREAD conversation-starter: What do you think of a writer's claim that Starbucks has become a 2008 version of the Gap?

The Gap hit a critical mass a decade ago and competitors had caught on to its strategies. With that, customers didn't find the store as exciting as they once did. "The same, presumably, could be said of Starbucks," writes Merek Fuchs. He questions Howard Schultz's excuses for the company's slowdown. (Starbucks has gotten too big and has more competition, he says.) Discuss this story or anything else Starbucks-related in the open thread.

Comments

[Barista Joe]

anybody find out what the new "smoothies" officially are?

[Coffee-Rob]

It's an interesting contrast with the McDonald's analogy that many are drawing. However, fashion trends are much more volatile than those in food service - coffee in particular. Perhaps Applebees is a more apt comparison, although I am more sanguine on what the future holds for SBUX.

[JMW]

So on the money -- I thought exactly the same thing after I heard about the "new" smoothies.

This is a company that doesn't know how to differentiate itself anymore. I don't think it's because of any particular move they made -- like breakfast sandwiches -- but an overarching bad strategy, a failure to produce a real competitive advantage over the years.

Just having a bunch of stores all over the place isn't a real competitive advantage. It doesn't lock your customers into your product or keep out competitors. All it does is get you foot traffic, and expensive foot traffic at that.

McDonald's can expand much more profitably than Starbucks with their franchise model. They can make better use of their variable costs -- labor, etc. -- to produce, say, a latte. A guy slinging a burger can turn around and make a latte; he's already there. SBUX has to hire baristas just to make lattes.

And, turning the situation on its head, McDonald's has -- for better or worse -- very unique products. I'd wager that Starbucks cannot easily make a hamburger that tastes just like theirs. That doesn't mean theirs is the "best" hamburger, just that it's unique and well-differentiated. But McDonald's can make lattes, and it's hard to say whether most people know the difference (or care).

Schultz, by buying Clover, is onto the right idea -- that Starbucks has to differentiate by providing unique products. But that doesn't mean Clover is enough, or anything else for that matter. Smoothies most definitely are not. And more so, the company has lost a ton of ground in the last few years.

I think this is just what happens when a company gets too big and doesn't have a strong culture at the top. Schultz basically handed off the thing to a smart, but nuts-and-bolts operations manager who didn't fundamentally "get" this whole coffee thing they're doing. He made lots of tactical decisions but turned the whole brand into a commodity in doing so.

The Gap did basically the same thing. They hired a turnaround guy who is smart but doesn't understand fashion. And after awhile, the brand means nothing (or worse than nothing).

It'll take a miracle for Schultz to turn the business around, honestly. He's smart, but his competitors are absolutely vicious and proven. Personally I think the company should close a ton of stores, consolidate the product line into something really unique, and buy out a few competitors (PEET comes to mind) so they can "own" a niche.

We'll see ...

[Bushrod]

Just came back from my local Starbucks. I got a frappuccino and mentioned to the barista that I hadn't had one in almost a year. After she gave me my drink, she went and got me a recovery coupon to make sure I didn't wait a year for my next one! (I'm a drip only regular there).

How darn cool is that?

[P.R.I.D.E.]

Thanks for the story, Bushrod! That is exactly why I love this company- we are empowered to go the extra mile, and I love seeing happy customers.

[kilroy]

How about a "Spring Cleanup Day".Clean the stores inside and out.Wash the windows and doors,pressure wash outside ,get rid of dried spilled drinks and dog hair; actually scrub some of the tables.Where the landlord has control SBUX should demand action as they're usually the the most important tenant.In my area of Seattle the material aspect of my coffee experience needs a little attention; the coffee's great!

[prre]

Mr. Fuchs' commentary is Right On!

Schultz continues to ignore his competition -- he even denies MCD is competition!

With that type of attitude, he'll continue the downward slide of a once admired company/Brand into the GAPS of retail...

[smokey]

oh people come on!! the sky is falling!the sky is falling! home depot reported today it is closing 15 stores. it is the first time the world's largest home improvement store chain has ever closed a store for perfomance reasons. ummmmm - sound familiar?? analysts have worried that as home depot gets bigger, it would invariably put stores in direct competition with excisting stores, known as "cannibalization." umm - sound familiar?? at my store we had a great "cleaning party", we cleaned every corner of the store and outside too!!.....our society overflows with critics, cynics and faultfinders. few take the time to point out anything you are doing right! our customer voice has definitely approved over the past 2 months!! COME ON PARTNERS - focus, believe, and share the legendary experience that only STARBUCKS can deliver!!!!!!onward howie.........

[Joe]

Mr. Howard Schultz may not view McDonalds as a competitor however McDonald certainly views Starbucks as one.

Their new latte television commercials are hilarious.

"I can read gossip magazines now"
"I can't speak French"
"I don't know where Paraguay is"
"Paraguay?"

[Jim Lane]

That good?

j.

[Torontodude]

JMW:

Kudos! Your post is one of the smartest things I've read about Starbucks anywhere. But my curiosity is killing me. Who the hell are you? Care to de-cloak? C'mon. Pretty please?

[SoCalRocks!]

I would have to say that a lot of what JMW has to offer, is debatable:

1) This is a company that doesn't know how to differentiate itself anymore

I will grant that Starbucks has made a series of mistakes that we need to correct on our own. However, I think a lot of the perception of Starbucks troubles has been built by every "top of the hour" newstory releasing test market info, casting doubt, and negatively influencing our customer base. More often than not, I am seeing Starbuckgossip being cited as a credible source. Are you kidding me? A gossip site? I am so tired of the bad press, because the reality is that the only reason we're being used as a scapegoat is for our recognized brand (drawing more viewers). I wonder why we don't see Arby's critiques on the 6'oclock news...

Just having a bunch of stores all over the place isn't a real competitive advantage.

Having an option to pick up a starbucks coffee more often than any other competitor allowed us to grow at warp speed. It is exactly what maintained our competitive advantage, in a growth market. It is the market change that has caused this to not be a competitive advantage.

A guy slinging a burger can turn around and make a latte; he's already there. SBUX has to hire baristas just to make lattes.

This is said straight from a Folger's addict, I suppose. And I would think that McDonald's customers would agree that the guy slingin the burger could sling a latte. I couldn't be more grossed out with that concept, and believe that this comes down to socioeconomics- your mid-high level earners will agree with me, your low income earners would care less. Quality of Life essentially...

I'd wager that Starbucks cannot easily make a hamburger that tastes just like theirs. That doesn't mean theirs is the "best" hamburger, just that it's unique and well-differentiated. But McDonald's can make lattes, and it's hard to say whether most people know the difference (or care).

Please go and try their hazelnut iced coffee and come back here and make the same statement. It is clearly marketed to all demographics, but the reality is that your value minded, lower income demographic won't care, but your mids-high demographic will spit it out (just like I did, and mind you I fall into the "lower income" category)

[Melody]

Your mid to high demographic group is rarely found at McDonald's period. They eat healthier than that (usually). Sure, there are going to be exceptions, but statistically, higher-income earners have longer life-spans often correlated with both better access to medical care AND a generally healthier lifestyle which is going to include avoiding places like McDonalds.

This is the crux of the problem of what Starbucks has to do? Do they want to maintain a bit of an exclusivity or do they want to be the coffee of anyone and everybody.

I almost agree with Howard Schultz that McDonald's is NOT the competition, so long as Starbucks maintains a certain 'premium environment' that appeals to the higher-income bracket individuals (I guess I would define that as someone making over $50,000 a year, but really, you can't get very far on $50k a year in Seattle.)

[Cali ASM]

Well, I just had another customer complain about the 30-min hold time for coffee (it's always just expired when they come in). Now, I know we can brew larger batches than 1/4, but we can't predict the future. I don't know when someone is going to come in and order a coffee before they come in, so I always brew 1/4 batches when it's slow, in other words, doing what the company expects, right?

I know 30-min hold time is done because of the freshness and quality, but I'm not sure this is going to work. I rarely had any customers complain when our coffee was held for an hour.

What does everyone else think? Any partner had customer complaints? Any customers who post here have any complaints regarding this? I'm intrigued to know.

[Melody]

I think the 30 minute hold time is crazy.

Yesterday I was at Starbucks and got to the register just when some Verona "had expired." I begged for a cup of it. I'm an addict, and I cannot tell the difference between a 30 minute hold time and one hour.

The Verona coffee was wonderful!

[MusicGal]

Cali ASM:
We solved this problem by having two shuttles for both decaf and regular. This way, when the partner at the register sees the hold time is getting below 10 minutes, they immediately start brewing the next batch. That way, there may be a little overlap (with 2 pots of fresh decaf, for example), but you're never caught empty-handed.
(And it's simple enough to do- if another partner walks by and sees that the time's getting low, they can give the register partner a tap on the shoulder to let them know.)

Melody, I beg to (respectfully) differ! I'm not a big brewed coffee drinker, but the 1hr-hold coffee tastes more 'burnt' to me. But hey, we're all entitled to our opinions! :D

[Joe]

Has Howard ever said who he thinks Starbucks competition is?

[DrKoob]

This whole thing with McDonalds is beyond stupid. Socalrocks is exactly right. Those of us who live healthy would not be caught dead in a McDonalds. I haven't been in one in more than 10 years. And as for McDonald's really stupid ads that make fun of SBX customers, please. I am not ashamed that I don't really like football, that I know where Paraguay is or that I have half a brain. I go to SBX for one thing--coffee. Brewed coffee.

And speaking of brewed coffee, why aren't there four brewing machines in every SBX. Then you can change one out every 15 minutes and there is always one fresh?

Last week while visiting Denver, I was in hog heaven. Every SBX I went into was brewing my favorite, Komodo. Outstanding.

[SoCalRocks!]

Melody- my thoughts exactly. Once we're comfortable articulating that our environment is premium (and we do the work to back it up in the stores) then we'll solve for most of the issues.

But folks, we're kidding ourselves if we think this will be easy. A premium environment dictates that we are right in our actions, 100% of the time, stop focusing on what we coulda/shoulda done, and focus on the customer right in front of you. Invite them into our stores, like it is our home. And keep it cleaner than your home (in most cases). :)

And please don't forget about customer recovery- it is your opportunity to make it right. Respectfully challenge if you're told otherwise. Think about it- could we give out customer recovery 10% of the time and build our brand that way, vs. having to resort to printing free coffee coupons in newspapers(like MCDs)?

[Melody]

Musicgal, I respect your sage opinion! Okay, I retract what I say about the 30 minute versus 60 minute hold times until I've done a taste test on this!

[tobarista]

To caliasm/melody,
Either start brewing a fresh batch of coffee when the timer is starting to hit the 5 minute limit, or serve the coffee that just barely hits over 30 minutes, it's not a huge difference if it's only 5 minutes over the 30 minute limit.

There shouldn't be many complaints about the 30 minute rule from customers, considering Starbucks started using the new rule BECAUSE customers were complaining that our coffee always tasted 'burnt'. Basically the only thing wrong with the 30 minute hold time is that you might run out of coffee for 5 minutes if someone decides to order 3 Venti's, 7 Ventis, or a big lineup for brewed coffee appears and catches you unaware while you're still brewing quarter or half batches.

[baristacee]

At many stores, there aren't enough urns to brew a backup before the old pot expires, so people will always have to wait. It actually embarrasses me when I have to make people wait for their coffee so often. It is a COFFEE SHOP. We shouldn't be out of coffee, but there's nothing I can do about it.

[Cali ASM]

Thank you guys for your opinions/help. I really appreciate it. I like some of your ideas. The one about having four shuttles would be great, unfortunately, my store is an older, smaller store and we only have room for three: PPR, Decaf PPR, and morning pick.

I know after 12pm I could use the morning pick shuttle for PPR or decaf, but we're never 100% sure when a large group of customers are going to order drip and we don't want to waste too much (even though Howard himself said we were going to waste more coffee than sale). Hmmm, maybe that's were I'm flawed.

You're right Tobarista, the reason the 30-min hold time exists is because customers complained. What is that saying, let's see, oh yeah, I remember: "you're damned if you do and damned if you don't."

[Tim]

I think it's a fair comparison. Not entirely true but it's a good comparison - I mean, I used to think that about the Gap and I stopped shopping there because I always found their clothing and fashions to be 2 or 3 years behind everyone else. Now I was just in the other day and their new stuff is great! They've started rolling out new store designs, the staff are friendlier, the clothes are better quality and more fashionable and the prices are more competitive.

In other words, the Gap is once again an it-brand after a decade of trying to reinvent itself.

Hopefully the same happens with Starbucks...

[Former $tarbuckie]

I have said it before on these boards and I will say it again......$tarbucks is fallen "out of fashion".....simple as that....It's really not the "cool" thing anymore....It's like the old adage: "anything easily had is not worth having".If the mainstream wants it everybody wants it-when the mainstream has it nobody wants it! $tarbucks did this to themselves.GREED, GREED, GREED. Now it's coming back to bite them in the a$$.

[MC]

Dear TOBARISTA:

A diner is a coffee shop. Starbucks is a coffee bar.

[Anonymouse]

Have to disagree with some of the folks dismissing the McD's thing - people who eat healthy still go to McD's once in a while when they're in a hurry - they don't only sell hamburgers - some of their breakfast fare is actually good for the person like myself who has to have protein (the $1, smaller, sausage breakfast burrito is an example - not talking McGriddles et al here.)
I gave in and ordered a black coffee to see what the fuss is about - and I have to say - I "get" why people are opting for it. It rivals any drip coffee I've ever been served at Starbucks, and I was shocked to hear myself thinking that, but truly, it's decent! As to whether they can do the fancy stuff with the McCafe lattes and such? Who knows - but I got a decent cup of black coffee in less than a minute, and my choice of hot breakfast items, never had to leave my car. Better than the gas station stuff, smoother than most of the roasts at Starbucks, not quite the nuance of other roasts at the other coffee chain I go to.
Don't understimate the draw of the "one stop shop." They do have something to worry about when it comes to folks who just take their coffee straight up, no frills, no fuss - which is not necessarily the usual Starbucks crowd, but definitely the untapped market Starbucks is trying to appeal to with Pike Place Roast. They might be regretting their decision to stop the breakfast sandwiches, though the stores around me never had them to start with, so it's always been a 2-part journey on those mornings when I want "the works."

[kirsty]

How about a "Spring Cleanup Day".Clean the stores inside and out.Wash the windows and doors,pressure wash outside ,get rid of dried spilled drinks and dog hair; actually scrub some of the tables.Where the landlord has control SBUX should demand action as they're usually the the most important tenant.In my area of Seattle the material aspect of my coffee experience needs a little attention; the coffee's great!

Posted by: kilroy | May 2, 2008 2:05:09 PM

_____________________________________

in my area at least - just north of the border from you - this is done at least once a month automatically. mats etc are pressure washed, as are the patio, windows/walls/ceilings higher than 10 feet, etc. i would assume that it's the same (or very similar) there. it does get done, you just don't see it because it takes all of five minutes to become messy again :)

[UPod]

Yesterday on our way to a wedding around 4 in the afternoon, my wife and I stopped at a local Starbucks in Forest Lake Minnesota ( about 20 miles north of St Paul ). It was raining pretty hard that day so we went through the drive-through. After my wife ordered her drink, we probably waited 3-4 minutes for our beverage because the guy in front of us ordered like 5 different kind of drinks. No big deal though. When we pulled up to the window for our drink, the barista said our drink was on the house and apologized for the long wait ( which I didn't really think was long at all ). We both thought that was really cool and it solidified both myself and wife as loyal customers.

[Argentius]

"Welcoming."

"Third Place."

"Premiere purveyors of the ... best coffees in the world."

I think this is what Starbucks needs to focus on to be positioned for the long run.

I went to McDonalds to try their lattes with a free coupon (from "unsnobbycoffee.com.") I'm about to make a more complete 'blog entry on the subject, but, as I was sitting on that cold, hard plastic bench drinking a moderate-to-okay latte, I noticed a sign:

"NO LOITERING. CUSTOMERS MAY REMAIN IN LOBBY ONLY WHILE CONSUMING FOOD. MAXIMUM STAY 30 MINUTES."

[smokey]

just wondering? does anyone know which starbucks is the busiest? i heard the university village in seattle is? i love that store, whenever i visit seattle i end up there. it's great for people watching, talk about the THIRD PLACE, that store is it for me!!!

[Andy]

Starbucks decided to become into direct competition with McDonald's when they decided to put their expansion plans on steroids and over-brand the concept. It's the law of retail----grow or die. Peet's chose the alternative route, stable, slow growth. It's a trade-off: grow fast and enjoy fast (temporary) profits, or grow slowly and risk other competitors muscling in. Unfortunately for SBUX, they chose to grow excessively fast AND McDonald's is muscling in competition for the marginal consumer that SBUX now needs BECAUSE they chose to grow so fast, which requires them to go lower and lower socio-economically for the additional consumers required for additional revenue growth. Add in a recession, and this is a toxic spiral.

A major difference with SBUX too is they finance the growth internally, which increases their exposure to bad locations. With MCD, a bad location is financed by someone else, with SBUX they are holding their own bag!

[P.R.I.D.E.]

Upod, thanks for sharing your story, we appreciate hearing the good news- i hate the saying "no news is good news" so this helps to validate that we are going above and beyond for customers.

[bobbykins]

CALI ASM and everyone,

Please use your extra urn after noon as a backup for regular drip. People should not have to be waiting for a fresh batch if you have the means to prevent it. Just get in the habit of starting a new batch when the timer on the old one gets down to 5 minutes. In an 8 hour period, you'll only be using 2 extra half-batches of coffee. (assuming you are currently brewing once every half hour)
This is not a lot of extra waste.

[Melody]

@Smokey:

U-Village (302) has got to be one of the busiest. Long hours, and u-village draws in many many people.

There is a free-standing Starbucks in the middle of an area that has heavy pedestrian traffic next to Westlake Center - that one has to be up there in how busy it is (store 3343). It's open fairly late. But I suspect a combination of changes has helped Starbucks shoot themselves on the foot with that location.

http://img5.ranchoweb.com/images/fashionmel/starbuckswestlakecenter03343-2008jan15-2.jpg
^ Photo of 3343

That store used to have a very cute walk up window with a constant line. You didn't have to go inside! It was such a busy store back then - even busier than now. Starbucks boarded up the walk-up window to use the space to put in a warming oven.

From 1988 to 1995 the few blocks of downtown Seattle - exactly where that Starbucks is - were closed to automobiles, and it was great pedestrian area, connecting shopping with the market. One of many stupid stupid stupid ideas that Seattle has done was to re-open Pine street in 1995. At least for sure, in the early 90s, that was the hottest, busiest Starbucks ever (well it was a Seattle Best and then became a Starbucks very early 90s). That store has such a history!

I love Starbucks history and I've thought that Starbucks should put out a history book.
http://mystarbucksidea.force.com/ideas/viewIdea.apexp?id=087500000004VcK&srPos=2&srKp=087
^ Please vote for my History Book idea! :-D

The original store (store 301 located at 1912 Pike Place) is often PACKED with tourists and lines out the door, especially in the summer.

So to answer your question, at least in Seattle, the busiest Starbucks are the (1) original store, (2) u-village, and for sure at one time, (perhaps no more) (3) the walk-up Starbucks on 4th & Pine at Westlake Center (3343).

[BaristaB]

"in my area at least - just north of the border from you - this is done at least once a month automatically. mats etc are pressure washed, as are the patio, windows/walls/ceilings higher than 10 feet, etc. i would assume that it's the same (or very similar) there. it does get done, you just don't see it because it takes all of five minutes to become messy again :)"

This is NOT mandatory in Nebraska at least... we had a "cleaning party" a couple week ago after close until 3 in the morning or so. It was on a volunteer basis and our SM bought pizza and snacks. I couldn't go because I'm a minor... sad.

I wish this happened every month... but alas...

[Jeff]

Personally, I think the whole 30-minute thing is a marketing gimmick. Never had a problem with one-hour hold time and the difference in taste was, and is, negligible. In a busy store with one DTO and one DTR, a front register person and a SS/floater, it can become busy enough that there is no time to look at the timers and the first indication the thirty minutes is up is the sound of the beep!

Grinding the coffee fresh twice daily, or more if necessary, should be sufficient and the hour hold time isn't excessive. My feeling is there were stores that were exceeding the hour, as I've been in a few and seen the flashing red lights on the urns indicating the hour limit had been exceeded. Perhaps the thinking is by setting a 30-minute hold time someone will make a fresh pot before an hour is up. I have no proof of this, it's just a feeling the truth lies somewhere in that gray area!

[Horace H. Pohtear]

Do a taste test Jeff - its different.

[Kitty]

Perhaps the thinking is by setting a 30-minute hold time someone will make a fresh pot before an hour is up. I have no proof of this, it's just a feeling the truth lies somewhere in that gray area!

Posted by: Jeff | May 3, 2008 2:06:54 PM

I do agree on that.

There were several times (at least in my market, don't know about the US) where hold times were cut, this isn't the first time. And more than once, one could get the impression that it was done to achieve that people keep up with the original hold time in the first place. I'm sure pretty much coffee was still sold after more than one hour hold - and that's when it develops a bad taste.

[dmanagerLA]

hey, does anyone have any tips on how to keep the filters standing when brewing quarter batches??? grinds in coffee = yucky.

sometimes, pulling the edge out helps a bit, but not always!

[TiredASM]

We received an update recommending that we put the filter in upside down. I think it has helped.

[Me]

We did the tasting fresh against 30 min against 60 min. The result was, the 30 min tasted the worst.
After a while we figured out why, the fresh and the 60 min were brewed in a freshly cleaned (urnex) urn, the 30 min only in a rinsed one (all dark inside) which should have been urnexed the night before but wasn't.

So we took from this tasting that cleaning the urns properly is way more important than the hold time. Unfortunately, with the 30 min limit we don't even have the time anymore to properly clean them in between brew-cycles.

[Kristin]

I am faced with a district management problem. Bold coffee i.e. the morning pick is supposed to stop after noon. Customers desperatly want the bold all day and our district manager has told us to continue to brew it all day.

That is great for the customers coming to her stores but I can't imagine how awful it must be for store in other districts when the customers gives them the line "well, the other starbucks always has bold all day long..."

What are y'alls' thoughts on this situation?

[Adam]

Today, I saw one of the closed stores, at Tropicana & Hualapai in Las Vegas, NV. The signs were removed, and the windows were papered over. It wasn't the most convenient store for me--it was three miles away and past two other stores--but it was next to a bakery that I liked and it opened up to a pleasant covered picnic area instead of a parking lot. I'm sorry to see it go.

[musicmama]

To solve the "we're too busy to look at the timers and run into 30+ minute hold times", we set our timers for 25 mins. We move the "timed out" coffee to the side warming stations, put the empty servers (or empty them now) into place and brew. Your moved servers are still less than 30 mins old, and when your new batch is done, you can dump the old batches and voila, fresh coffee all the time. Sometimes when we're slower, we move the fresh batches over and get the empty servers into place with filters in the baskets.

[elaine]

question about pastries: should all pastry's have the plastic lids or is it okay to cover them in saran wrap when closing? i couldn't find anything about it. thanks for the help

[Concerned]

What Elaine is trying to say is that since Starbucks is too cheap, it keeps pastries for multiple days at a time, sometimes up to two week for certain items.

It doesn't really matter what they are "covered" with if you're gonna be keeping them until they sell out.

[Marcus]

I think that Starbucks is being far too transparent with its problems and these transformation letters promising to improve.

If I were running Starbucks I would stop this whole "Mea culpa, we'll do anything to win you back" marketing they have. It makes them look weak and desperate and unsure of themselves. They are hurting their brand by explaining themselves so much.

Apple has a good model (and a good history to observe of how to come back from the brink of death).

During Apple's darkest hours, they came out with the very non-apologetic Think Different campaign.

[mint coco]

whats the point of the mint chocolate syrup? there's already mocha + peppermint???

[sched]

How long does it take your mgr to do next week's schedule?

Mine took 3hrs. (He stayed past his time just to do the sched. he left at 8pm instead of 5pm.)

WTF?