Starbucks has released a bullet-pointed list of the new strategic initiatives that are supposed to revitalize its business:
- improving the current state of the U.S. business by refocusing on the customer experience in the stores, new products and store design elements, and new training and tools for the Company's store partners to help them give customers a superior experience;
- slowing the Company's pace of U.S. store openings and closing a number of underperforming U.S. store locations, enabling Starbucks to renew its focus on its store-level unit economics;
- re-igniting the emotional attachment with customers and restoring the connections customers have with Starbucks(R) coffee, brand, people and stores;
- re-aligning Starbucks organization and streamlining the management to better support customer-focused initiatives and reallocating resources to key value drivers; and
- accelerating expansion and increasing the profitability of Starbucks outside the U.S., including redeploying a portion of the capital originally earmarked for U.S. store growth to the international business.
One of my commenters argues that Starbucks is retrenching because it went too downmarket; stores in lower-income areas are not as profitable, and (I assume) erode the lifestyle cachet of the brand. This list rather bolsters that impression.
Where was the $4 latte on the list of privileges?
I agree that Starbucks has gone too downmarket, or at least has become a commodity-like product. I sold my Starbucks stock when I saw that the crappy coffee at our work meetings had a Starbucks label on it. Starbucks did well by convincing people that they should spend $5 on a premium product. Now, I can get a similar product at Dunkin Donuts, and Starbucks is just another brand of coffee to buy in the supermarket. There stock price has significant growth built into it already, and I don't see how the company can possible grow like a high growth company at this point.
Personally, I can't drink any drip-made coffee, period. I _can_ drink a triple cappucino from Starbucks or indeed any vendor possessing an espresso machine, but generally find the derived enjoyment to be short of the charged price. So I don't see in what way Starbucks went downmarket -- it still charges premium dollar for a barely acceptable product, all due to lack of lower-priced or higher-quality competition. Sounds like a luxury-goods monopoly to me :-)
Oh, and their packaged beans are the same stale crap as grocery stores sell :( Does anyone know of a source for freshly roasted beans that's markedly cheaper than Gevalia? I mean a commercial source, not "the coffee roasting machine in my kitchen"...
How about, "rethink the absurd operational process we use in our stores so that the waits for a simple cup of coffee are not ridiculously long."
"I can get a similar product at Dunkin Donuts"
The Dunkin' Donuts stores near me charge about the same or more than Starbucks does. Despite its blue collar image, Dunkin' isn't so cheap. Those franchises are link money-printing machines though.
"There stock price has significant growth built into it already"
I'm not sure that's still the case.Starbucks's forward P/E and PEG are starting to look fairly reasonable.
It also wouldn't hurt anything if they'd stop over-roasting their beans so that their non-candy coffee would stop tasting burnt.
Yes... one way to make decent coffee at home is to brew espresso from light-to-medium roasted beans. I imagine Starbucks overroasts because their signature drinks contain so little coffee that they need the artifical bitterness to prop the illusion.
"( Does anyone know of a source for freshly roasted beans that's markedly cheaper than Gevalia? I mean a commercial source, not "the coffee roasting machine in my kitchen"..."
Zabar's.
I like the Vienna Roast. BTW, either they raised their prices $1, or their online prices are a dollar more expensive than the store, but this is still the best deal in coffee, IMO.
It is indeed cheaper... if the roast is fresh in what they ship it sounds like a deal I've got to try.
One of my commenters argues that Starbucks is retrenching because it went too downmarket; stores in lower-income areas are not as profitable, and (I assume) erode the lifestyle cachet of the brand.
If you're right, and I imagine you are... ugh. What a fucked up world.
Freddie,
It's worse than that, SBUX went aggressively down-market to capture the 'ghetto fabulous' $$ after one of their go-getters noticed high traffic at one of their new stores N. of 125th in the 'hattie. All of sudden they were blowing 'aspiration brand' smoke up their own skirts and co-locating with places like ABC Check cashing and Al's Pawn & Gun..
Now, if Starbucks is basically going to redline in an effort to bolster cachet and reinforce the price premium, does that mean people of conscience (like 'humanely murdered meat' lovers) should therefore curb their appetite for such coffee?
Hmmmm.
At least Starbucks is not going the route of Krispy Kreme, who acted the total food slut, spilling it's sugars and sweetness indiscrimately over any willing mouth, and via any shabby shack or corner store.
I applaud Starbuck's vaguely Obamic plans to revitalize their lands.
I imagine Starbucks overroasts because their signature drinks contain so little coffee that they need the artifical bitterness to prop the illusion.
The better explanation is that heavy roasting masks the variances in the beans, allowing a fairly consistent output from a wider range of inputs.
In any case, it is quite possible for a good espresso-based drink to use a very darkly roasted bean. However, there's something of an art to it, since you're walking the fine line between sharp with a smooth finish (good) and sharp with a bitter finish (bad), and few US coffee shops are able to achieve it outside of the Pacific Northwest (especially since dark-roasted beans tend to age rapidly and catastrophically).
Starbucks emulates it for uninitiated pallates, but the mass-production techniques and commercial distribution make the product border on bitter most of the time.
"Indiscriminately" (in corrective reference to my original post)
make the product border on bitter most of the time
That's an understatement of the week, at least :-) Drink a Starbucks doppio and tell me it ain't bitter... with a straight face!
That said, I'd be real curious to try a good espresso made from a dark roast. Afraid I'd have to spring for the airfare to Italy first, though.
"That said, I'd be real curious to try a good espresso made from a dark roast. Afraid I'd have to spring for the airfare to Italy first, though."
No need: just find a local coffee bar that uses Illy espresso beans.
...Max...: Another excellent source is Porto Rico Importing Company. The prices are good, they ship quickly, and the coffee is fresh-roasted and very high quality.
That's an understatement of the week, at least :-) Drink a Starbucks doppio and tell me it ain't bitter... with a straight face!
I've had coffee at a wide range of shops all over the US and also prepare my own at home on a regular basis. I'll concede that Starbucks isn't top-shelf brew but I don't share your enthusiasm to denigrate.
That said, I'd be real curious to try a good espresso made from a dark roast. Afraid I'd have to spring for the airfare to Italy first, though.
Try the Pacific Northwest. There are many local roasters and many good local or regional coffee chains available.