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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
So, 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
Starbucks 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.
Comments (21)
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I work at a Starbucks in Minnesota, and the only correction I want to make is to the description of the new Vivanno beverages. They are nothing like sorbetto! They are both, actually, exactly like smoothies. The Orange Mango Blend uses a Naked juice base with milk, a whole banana, protein powder and ice, while the Banana Chocolate Blend uses milk, mocha syrup, and the last three ingredients from above. The Orange Mango is incredibly delicious, and we have a regular who has even started to lose weight because she has found herself replacing a meal with the Vivanno, which only clocks in at 270 calories (with 5g of fiber and 11g of protein per).
And as far as not deviating from the core of coffee, we often add espresso to the banana chocolate.
posted by Alexis on 8-6-2008 at 12:20 pm
I’m in the STL Metropolitan area and we have Vivanno at our local Starbucks locations.
posted by Orange on 8-6-2008 at 12:29 pm
Most of the little changes at Starbuck’s aren’t going to help that much in this type of economy. In tougher financial times, people figure out ways to cut their daily spending. Stopping at a coffee shop every morning for a 4 buck coffee drink when there’s free coffee in the pot at the office or cheap coffee brewed at home and brought to work in a travel mug is a ridiculous extravagance. Even super-premium coffee brewed at home is cheaper than a daily coffee shop habit. So it’s going to be one of the first cuts that people make when they have to tighten up their budget.
Also, with the tougher times, conspicuous consumption of luxury things is looking less cool. A couple of years ago, it was kind of a cool status thing to be seen drinking Starbucks. It took the status symbol spot that bottled water had held before it became so widespread that all economic levels were drinking it. It was a thing was a little luxury that wasn’t all that expensive, but wasn’t for the struggling. Something upper-middle class folks could show off. But with tougher times, the show is less cool. People now are starting to see the folks that buy a 4 dollar cup of coffee on the way to work everyday as silly instead of cool.
Plus, environmentalism is hip again. Throwing away a disposible cup from a coffee shop is wasteful. Using your own cup at home or at your office is greener. Yes, you could bring your own cup to a coffee shop, but it’s one of those things where people don’t like to stick out or be hassled. It’s not convenient to remember to bring your cup with you to have refilled. I haven’t tried it at Starbucks, but when I bring my own cup to other restaurants and drink shops, the help is very confused. They will usually use it when I explain, but who wants to explain all the time? Even if they get used to it eventually, no one wants to be “that weird environmental lady that brings her own cup”.
posted by Melissa on 8-6-2008 at 1:47 pm
The Banana Chocolate Vivanno is sooooo good, especially with espresso in it. The protein powder is incredibly filling, so about twice a week I replace a meal with one.
posted by adrienne on 8-6-2008 at 2:02 pm
Not only am I proud to be “that weird environmental lady that brings her own cup,” but most of the baristas at my Starbucks recognize the cup that I bring in. Even if they’re behind the espresso machine and don’t see me at the counter right away. They know me, they know my drink. And every Starbucks I’ve ever been in says right on the menu board that you can save 10 cents by bringing in your own cup. No explanation necessary.
posted by Rachel on 8-6-2008 at 2:07 pm
Rachel-
That’s awesome. I didn’t know Starbuck’s was that cool and welcoming about bringing in a cup. Now I know a place that won’t look at me funny.
posted by Melissa on 8-6-2008 at 2:29 pm
What is Starbucks to do? They’re a coffee shop and people can only consume so much coffee and coffee related stuff.
I guess its only logical you’d start selling other shit to the people who are just standing around waiting for their coffee.
Personally, I like their coffee, though I agree the Pike’s Place Roast pretty much sucks. Not nearly as bad as the dish water Dunkin Donuts sells, but certainly not the quality Starbucks is known for.
posted by Florida on 8-6-2008 at 2:52 pm
I want a banana chocolate smoothie!! I’m near the Springfield, MA area, and I don’t think we have those at the stores around here. That’s disheartening!!
posted by Cassie on 8-6-2008 at 3:30 pm
If by “limp brew” you mean unburnt, I’m all for it.
posted by arby on 8-6-2008 at 3:57 pm
Interesting essay about the mermaid logo.
(I’ve never posted a link in the comments section, and just found out you can’t do that. So I put it in the “website” field in the box above. Is that ok? It’s a very mentalfloss-ish kind of article.)
posted by Pete on 8-6-2008 at 4:05 pm
Ah! If you click my name in the above entry you can read the essay.
posted by Pete on 8-6-2008 at 4:07 pm
The biggest change to Starbucks corporate culture? Loyalty cards and free wifi.
When I worked at Starbucks corporate during the First Schultz Era we were told that the Mermaid would NEVER do loyalty/punch cards or free Internet access. Those were promotional gimmicks reserved for cafes desperate for business, and with the company opening stores across the street from each other that obviously wasn’t us. Well, it sure is now.
posted by Dan on 8-6-2008 at 4:27 pm
I’m not a fan of their coffee, but I do like their consistency.
The first thing I would change is the food in their pastry cases. A lot of times when I’ve skipped breakfast in the morning and am grabbing something, I find myself skipping Starbucks because their pastries are just so bad. I’ve gotten their breakfast sandwiches when I’ve been in a crunch, but then I find myself picking pieces of meat off.
At home, I go to a local bakery and get good pastries, then if I have time, I will grab a drink from Starbucks.
posted by Heidi on 8-6-2008 at 9:10 pm
The new drink is the coffee brewed by the Clover, which is a new type of coffee machine. There was a profile of the company who makes it and some quotes from Shultz in the last issue of Fast Company. A single cup will retail for over $3 and is supposedly “the best cup of brewed coffee he has ever tasted.” The article goes on to speculate that Starbucks will stop making the fancy coffee-baaed “shakes” mentioned above…back to basics.
posted by Ben on 8-6-2008 at 11:22 pm
maybe they could roast their beans instead of burning them.
posted by tim on 8-7-2008 at 12:37 am
It’s good to hear that a corporate giant like Starbucks is realizing that the reason they got so big is because of the COFFEE and not all of the other barely decent stuff they have. Hopefully their mochas will be more balanced and actually flavorful.
I was never a really big fan of Starbucks’ coffee, It always tasted burnt and old. I preferred their Tazo teas (passion iced tea lemonade = yum) and chai more, but I may start venturing into the more coffee-laden side of the menu now.
The one thing that ticks me off though is that Starbucks is the only place I know where you have to pay for wi-fi in a public place. For a broke college student with crappy dial-up like myself, it’s disappointing to be in a hot-spot and not be able to actually USE it.
posted by heather on 8-7-2008 at 3:05 am
I’m curious… does the Clover magically transform Starbucks burnt, stale beans into something drinkable?
posted by Jason! on 8-7-2008 at 4:49 pm
I like to see they are scaling back but I noticed on the list of closed stores they are keeping many open. It is ridiculous to have a Starbucks inside the grocery store when literally next door is a Starbucks. Apparently people can’t walk from the grocery store to the Starbucks next door.
I noticed the smoothies but haven’t tried them. They should have free-wifi because people would stay around longer and buy more coffee.
In regards to competion, the McDonald’s iced coffee isn’t that bad and is cheaper.
posted by Gina on 8-8-2008 at 3:47 pm
Cassie – I live in Connecticut, only about a half hour from you and we have Vivannos at the Starbucks near me. I bet you will have them soon.
posted by becca on 8-11-2008 at 1:28 am
Starbucks uses stale, low quality beans. Roasting should be done in-house and ground minutes before being brewed for optimum taste. Anyone looking for a great cup of coffee should find a coffee shop that roasts in-house. It’ll be better coffee at a better price.
posted by Sam on 8-13-2008 at 1:11 am
I’m curious… does the Clover magically transform Starbucks burnt, stale beans into something drinkable?In regards to competion, the McDonald’s iced coffee isn’t that bad and is cheaper.
posted by Sie Whange on 9-13-2008 at 4:59 am