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The Beginning of the End For Starbucks?

11 Wednesday Feb 2015

Posted by Paul Kiser in Branding, Business, Communication, Customer Relations, Customer Service, Ethics, Public Image, Public Relations, Social Media Relations, The Tipping Point

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Tags

*bucks, caffine, Coffee, coffee brewers, Coffee retailers, Oprah Chai Tea, SBUX, Starbucks, tea

WTF? Even Jasmine is disappointed

WTF? Even Jasmine is disappointed

There are always people who hate Starbucks. It’s easy to do. A person can find retail coffee brewing houses that make as good, or better espresso drinks, and the die-hard loyalty of Starbucks customers, like myself, can be obnoxious. Even the term, ‘barista,’ can seem pretentious to some.

Still, Starbucks has always done one thing right: exceed customer’s expectations. Note some of their highlights:

  • When coffee drinking was dying out with old people who were raised in the era of the peculator coffee pot, Starbucks revolutionized coffee drinking with espresso drinks that created a new generation of caffeine consumers.
  • When other food and beverage businesses were trying to get the customer out the door as fast as possible, Starbucks was offering free WiFi and encouraging customers to enjoy a non-work, non-home, ‘third place’ to spend time to relax and enjoy.
  • When the coffee/tea/snack menu was becoming boring, Starbucks re-designed their menu and name to become known for more than just beverages.

Starbucks has always tried to do a little more than their competitors, which is why they have stood out. 

But lately it seems Starbucks has fallen victim to the accountants and investors. This is to be expected. The average Fortune 500 or equivalent corporation last only between 40 to 50 years. Smaller companies have a much shorter life span.

“The average Fortune 500 or equivalent corporation last only between 40 to 50 years”

Typically a successful company manages become established and then after a period of time it catches fire. This is usually a combination of having a great idea at an unexpected moment. Customers often have a feeling of relief and joy associated with the product or service, a “WOW!” feeling. It can take twenty years or more for a business to have this kind of impact in a market.

If the business can survive the explosive growth phase, the next phase is coasting or reinvention. Coasting companies usually don’t make it to forty years. Competition is always ready to go after the market share of the leader who thinks they’re unbeatable. Anyone can copy and improve upon an idea.

However, the business that works to keep ahead of the competition by offering their customers something extra tend to outlast those who only copy them. Certainly, Starbucks fits this mold.

But at some point the accountants and investors start chipping away at a successful enterprise. They start by whispering, “We can save five cents per unit if we don’t do this. Why should we offer this, it doesn’t bring in revenue!” Soon managers are focusing on saving money to look good, not creating new sales.

“We can save five cents per unit if we don’t do this. Why should we offer this, it doesn’t bring in revenue!”

That’s when the wheels come off. As the company ‘saves’ money the customer begins to wonder why they do business with them instead of the competition. As revenue shrinks, investors get nervous, accountants ring the alarm bells and the pressure to do more with less boils the great people out of the company. At this point the fate of the company is set. The people left don’t know how to offer the unexpected to the customer and if they did, it would be against company policy.

Starbucks became forty on March 30, 2011. Today they are almost 44 years old. So where is Starbucks now?

A few years ago I noticed that most Starbucks stores took away all the trash cans from outside the store. Starbucks offers drive through service and outdoor seating a most of its stores, so it is obvious that outside trash cans are needed, but somewhere someone said, “Why do we offer to take care of people’s trash? It doesn’t provide revenue!” That was the first sign of a change in attitude.

This past holiday season Starbucks was again offering their ‘Sticker’ program for the holiday drinks, offering a free drink for every five holiday drinks sold. At least a week before Christmas Starbucks began running out of the holiday drink syrups. This was in contrary to past years when some of the holiday drinks were available until well into January. Why would Starbucks miscalculate how popular the holiday drinks would be, and how hard would it have been to order more from their supplier?

Of course, without holiday drinks, Starbucks saved money on the Sticker program. Obviously, an accountant projected the maximum loss of free drinks through the Sticker program and cut off the supply when the maximum benefit was reached in holiday drink sales.

The final evidence for me was subtle, but obvious.

Many Starbucks offer a ‘Puppachino’ (whipping cream in a kid’s cup) for people who have a dog. This is an off-menu free service and it caused our dog to go from barking at the Starbucks window attendant to quietly and anxiously anticipating her Puppachino. Today, our Puppachino was water in a kid’s cup with a little whip cream on top.

The simple change in a free service was a deafening moan of a company that is hemorrhaging goodwill from cuts to the veins of good management. No one would offer a cup of sticky, whip cream-laced water to their dog inside a car. It was a slap in the face of the customers. The manager is saying, “we can’t afford to offer this service, but we know you’ll bitch if we stop it, so here, pour this on your backseat.”

Starbucks is in full retreat and is following the spiral downward to be just another company that we will reminisce about in ten years.

A Cup of Like

26 Wednesday Mar 2014

Posted by Paul Kiser in About Reno, Branding, Business, Customer Relations, Customer Service, Employee Retention, Ethics, Human Resources, Lessons of Life, Management Practices, Passionate People, Pride, Public Image, Public Relations, Re-Imagine!, Relationships, Respect, The Tipping Point, Tom Peters, Travel

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Tags

Airlines, Coffee, hotels, Lady Gaga, like, people, Starbucks, tea

Grande cup of Like

Grande cup of Like

I don’t feel it’s appropriate for a business to ‘love’ its customers. Loving someone is a personal bond that shouldn’t be related to business, (unless you’re Lady Gaga, then you can love your ‘monsters.’)

However, I do feel strongly that a business should ‘like‘ its customers. When I go into a coffee house I can tell if they are serving drinks, or if they are offering a cup of like. Anyone can serve a drink, but serving like requires more than the mechanics of taking an order, knowing how much milk to put in a cup, and/or yelling, “I have a Venti Latte with two shots on the bar!”

My home Starbucks on 7th and Keystone in Reno, Nevada has ‘like’ down. They seem truly happy when a customer walks in the door. That doesn’t mean they don’t have their down days, but most of the time you will get more than your drink from the staff.

This is not what I experience when I travel. It’s easy to pick on airlines, because if there is one group of people who don’t ‘like’ their customers, it’s the air travel industry, but even finding hotel or restaurant staff that makes you feel liked has become harder and harder to do.

In fact, a business that likes their customer is so rare that a genuine friendly person stands out among the ugliness of customer service in most businesses. The opportunity to beat the competition is to simply like your customers.

The place to start is with management. Managers have to like their staff and like their job. If their not happy then how can the staff possibly be?

One more thought:  In a world of Twitter, Facebook, and Yelp, how can any business not afford to like their customers?

Starbucks Menu Makeover Launches in Reno

27 Monday Jan 2014

Posted by Paul Kiser in About Reno, Branding, Business, Customer Relations, Customer Service, Health, Management Practices, Public Image, Public Relations

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Tags

bakery, Beverage, Coffee, Food, La Boulange, Nevada, pastry, Reno, Starbucks, tea

Following the successful introduction of San Francisco’s La Boulange pastries in other cities, the Reno-area Starbucks will introduce the new menu on Tuesday, January 28, 2014.

The upper pastry case is where the most visible changes will occur

The upper pastry case is where the most visible changes will occur  (Starbucks at 7th & Keystone in Reno, NV, USA)

The food items are a continuation of Starbucks effort to expand its product offerings beyond coffee and tea beverages. Many of the pastries currently offered can still be found, although some have been transformed into mini-loaves (A.K.A. Loaf Cakes) rather than slices of large loaves.

The introduction of Savory Squares combines the lightness of a pastry around a omelet-type center (Ham & Cheese, Tomato & Cheese, and Wheat Spinach.) Starbucks will continue to offer the Breakfast Sandwiches, oatmeal, and items found below the pastry case, but this partnership with La Boulange will take the next step in offering specialty food to compliment its speciality beverages.

For more information on the new menu, click here to visit the Starbucks website.

(This article was not solicited, nor was any compensation offered in payment for it.)

Starbucks is Re-Imagining the business…again

22 Friday Oct 2010

Posted by Paul Kiser in Branding, Business, Communication, Customer Relations, Customer Service, Information Technology, Internet, Management Practices, Passionate People, Print Media, Public Relations, Re-Imagine!, Relationships, Rotary, Social Interactive Media (SIM), Social Media Relations, Tom Peters, Traditional Media, Travel, Website, Women

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alcoholic drinks, Bars, Beer, Blogging, Blogs, Coffee, Customer Loyalty, Digital Starbucks, Executive Management, Free Internet, Free WiFi, Internet, Management Practices, Nevada, New Business World, New York Times, Newspapers, NYT, Public Image, Public Relations, Re-Imagine!, Selling, Social Media, Social Networking, Starbucks, tea, The Wall Street Journal, Tom Peters, USA Today, Value-added, wine, WSJ

by Paul Kiser
USA PDT  [Twitter: ] [Facebook] [LinkedIn] [Skype:kiserrotary or 775.624.5679]

Paul Kiser

This week Starbucks continued to add value to its stores and more Re-Imagining seems to be in the forecast. A few months ago Starbucks did the smart move of offering free WiFi for everyone (see article below) and on Wednesday they took it one step farther with a Digital Starbucks that features free web content if you sign on to their WiFi service while you’re in the store.

(Free WiFi at Starbucks)

Now when you use the free WiFi service in any Starbucks you can also read a digital version of the day’s Wall Street Journal, New York Times, or the USA Today. The New York Times requires software download of a reader, but the USA Today loads up its own reader and retains the exact look of the paper copy. The site also includes Yahoo! news and GOOD content.


In addition to news, the Digital Starbucks offers access to a selection of entertainment, wellness, business/career, and local online resources. There is also a page to access most of the functions found on the Starbucks website. It seems apparent that Starbucks has teamed with AT&T, the WSJ, NYT, USA Today, and several others to offer this value-added service. Recently all Starbucks stores received new labeled newspaper stands with the New York Times, Wall Street Journal, and USA Today in the top three shelves with the local paper given the bottom shelf. In my October tour of stores in Houston, Boston, Denver, and Reno I have seen more papers sold out than I have ever seen at a Starbucks store. Obviously the collaboration is a win-win.

A screen shot of the DG Wellness page

While some information has been sent out regarding the new online features most people have not caught on to the major remake of the log-in page and the new free media resources. That will change over time and I expect Starbucks will see a positive increase in store traffic as customers become aware of what they can access for free at their local store. I have already noticed high occupancy of the key ‘power’ tables (tables next to a power outlet) in almost every store I’ve visited since the free WiFi service started on July 1st.

Starbucks After Hours
The value-added virtual Starbucks is small change compared to what may be coming to some Starbucks locations. As reported in this Monday’s USA Today, the company has been testing wine and beer service at a Seattle location. The three-month remodel of a standard store resulted in a cafe-type look and feel, moving away from the glorified fast food feel of most coffee houses. The move is designed to generate more late day revenue when coffee sales die down. There is little doubt that local bars may find a Starbucks too much to compete with as it creates a middle ground for those like getting out in the evening, but seek a relaxed atmosphere free of loud music and single men on the hunt.

While I remained concerned that Starbucks is allowing accountants have too much say in store operations, I have to congratulate them on bringing value-added service and innovative ideas into the forefront. The winner is the customer … the only person that matters.

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