Under Old Management: A Giant List of 14 Changes at Starbucks

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"We're not this young, beloved, entrepreneurial enterprise anymore"¦ We have to do business in a different way." "“ Starbucks CEO Howard Schultz

And that's exactly what he's doing "“ business in a different way. And then in a different way. And then in a way that's different from that. In early January, Schultz reclaimed the CEO torch he passed on back in 2000 and has since been making some pretty drastic and rather disparate changes. So far we've seen:

1. The Mystery Concoction/Game Changer

Picture 25.pngSo, how do you one-up what every one else in the caffeine vending business is doing. According to Schultz, there's a new brew that he's been referring to as "a game-changer in the coffee space, something in a cup." What is it? My guess is it's the Sorbetto frozen beverage that the 'Bucks released in LA & OC early in July, but we'll just have to wait to see.

2. Putting faith in an $11,000 machine

Story has it that Schultz saw the line at Café Grumpy in Chelsea, which uses an $11,000 Clover coffeemaker, got a coffee and declared it the "best cup of brewed coffee I have ever tasted." So good, in fact, that he discreetly bought the Clover-making company, the Coffee Equipment Company, and began installing Clovers at stores in Seattle and Boston in summer 07. Clover-made coffee sold for as much as $3.05, which is about a dollar more than Starbucks' regular brew. He plans to accelerate the rollout of the machines in the US and international markets.

3. New Store Design

Picture 27.pngStarbucks is also apparently looking into changing the design of the 15,000 stores. Architect Magazine asked 5 teams of architects from around the country to share their vision of the 21st century coffee shop. You can check them out at the link above.

4. Stop watering down the flavor

Though Starbucks denies it, the introduction of the Pike's Place Roast was in response to increasing competition from Dunkin Donuts and McD's (whose coffee tastes better than Starbucks, per a Consumer Reports survey). Starbucks wanted an "everyday brew," which is a better way of saying it has placated the American taste for a limp brew.

5. Drum up the Nostalgia

Over and over, the mantra has been "return to our core "“ all things coffee." In that spirit, Starbucks has been drumming up the nostalgia for the little brand that could, and even reintroduced the old icon of the mermaid, with a brown logo carrying a tagline "Roasting Coffee Since 1971."

6. Banish the breakfast sandwich

While it earns the 'Bucks a tidy profit, it deviates from the core business "“ "all things coffee." Plus, the smell interfered with the coffee aroma in the store, and thus, the Starbucks experience. Schultz swore to pull it in January"¦

7. Then bring back the breakfast sandwich

"¦But rumors have spread that Starbucks is actually bringing the breakfast sandwich back. Apparently, they've been "reformulated to eliminate the 'smell' problem.

8. Ditch the music label

If you didn't know, Starbucks started a record label called HearMusic. It even has its own XM channel (now Starbucks XM Café). But despite drawing talent like Paul McCartney, Starbucks is scaling the business back. Good move, since it only sells an average of 2 CD's a day per store. Talk about deviating from the core business.

9. Ditch the underperformers

In July, Starbucks announced its closure of 600 stores. Check this map for a closure near you, or peep the full list. It's also dropping 61 of its 84 stores in Australia, and eliminating 1,000 support jobs (not including all layoffs due to stores closures).

10. Re-Education

Schultz closed more than 7,000 stores for three hours in February to allow 135,000 baristas to relearn—or learn—how to make a espresso.

11. One Buck 'Bucks

Starbucks offered $1.00 Short cups of coffee with free refills (in Seattle-area stores) earlier in January. Who knew there was a short?

12. Discounts to Addicts

Starbucks said it will now offer its morning customers any iced grande beverage for $2 after 2 p.m. That's a big cut, since a grande iced latte, for example, normally costs $4. Customers must present a receipt from their morning Starbucks visit in order to get the discount.

13. Starbucks Card Rewards

Now they want to reward loyal customers by giving them customizations like syrup or an extra shot on the house. So if you have a rewards card and you order a tall hazelnut latte, you will only be charged for a tall latte. Rewards card holders are also given up to 2 consecutive hours of free internet in the stores.

14. MyStarbucksIdea.com

Yes, it's yet another company tring to get in on the social networking game. Now you can join up with Starbucks online where you can share your ideas, engage in conversations, and play a role in shaping Starbucks future.

See more of what Diana learned today, here.

August 6, 2008 - 7:37am
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