Not too long ago, I wrote about how I thought Starbucks move to offer a cup of coffee for a buck was a smart move. This was despite the fact that it was a move that drifted away from its original branding.
Starbucks was testing the offer in a few stores and, to the best of my knowledge, it hasn’t expanded the offer to all of its outlets. But whether it keeps the dollar coffee offer or not, at least doing so was in line with their core competency, i.e., serving coffee.
Over the years, Starbucks has gradually strayed from what made it unique– serving up coffee in a variety of ways, usually grounding the coffee beans on location.
I assume as a cost savings, they began to use preground coffee beans. Unfortunately, this cut back on the rich coffee aroma that would usually great visitors.
They also took it upon themselves to begin crowding their shops with CDs and books, usually of an eclectic variety that had limited appeal.
Okay, so accuse me of a degree of reverse snobbery on the “eclectic” comment. However, for all their attempts to turn CDs into a profit center, their stores have averaged CD sales of approximately two a day. I’ve no idea how book sales have gone, but I’ll bet neither Amazon, Barnes & Noble or Borders are feeling threatened.
Basically, attempts to expand their product offerings beyond their core competency and attempting to cut costs with preground coffee have failed.
This is pretty much true of any business that fails to protect and nurture its core compentency. Starbucks is not a CD and book channel, it is a coffee shop that’s customers have certain expectations when they walk in the door.
One of which is that they will smell coffee, and not ham and egg sandwiches. A friend of mine told me a while back that he had stopped frequenting a certain Starbucks because, as he put it, “It smells like a Waffle House when I walk in.”
Nothing against Waffle House, it’s just…well…Starbucks shouldn’t smell like a Waffle House.
Luckily for Starbucks, the friend has found another Starbucks locale more to his liking. So, at least in his case, they didn’t totally lose a customer.
Regardless, the fact that its average store sales are flat or declining means they’re losing business. Some of that is due to economic conditions beyond their control. Hence, part of why I think dollar coffee is a good idea.
Starbucks knows its got problems. They canned CEO Jim Donald and brought founder Howard Schultz back to resuscitate the company.
But Schultz recently made a bad move in an attempt to “regain the soul of the past.”
He shut down all 7,300 US stores at 5:30 pm on February 25 to retrain store employees in the complexities of making coffee and selling it. It was a move intended to garner attention and send a message that the “old” Starbucks was returning.
Unfortunately, Dunkin’ Donuts took advantage of the three hours closing, offering a 99-cent latte. Dunkin’ attracted a lot of coffee drinkers, 80% of whom indicated they would return to Dunkin’ soon.
So the three hour closing didn’t quite go as planned, although it did attract plenty of press.
Will it bring back lost customers? We’ll have to see.
At least Starbucks is focusing on what it does best– coffee– and hopefully not searching for ways to expand too far beyond coffee making. By refocusing on its core compentency, they’ve got their best shot of regaining the edge they once had in the coffee shop business.
Filed under: Marketing, Public Relations, Sales Promotion | Tagged: Coffee, Dunkin' Donuts, Starbucks, Waffle House
