Starbucks Just Announced a Shocking Shift in Strategy That Will Affect Every Coffee Drinker
This is a complete change from everything Starbucks seemed to be going for.
PHOTO CREDIT: Getty Images
Absurdly Driven looks at the world of business with a skeptical eye and a firmly rooted tongue in cheek.
It was supposed to go like this.
The Starbucks you know would carry on being the Starbucks you know, except that it wanted you to know it more often.
The coffee chain intended to lure you in for lunch as well as breakfast.
It wanted you to believe it was keeping up with at least some of the changing tastes.
But if you were a millennial, or merely (thought you) had a slightly superior palate, it wanted you to switch to a new, fancier version of Starbucks.
This was called Starbucks Reserve.
It would be reserved for more discerning types, those who were prepared to spend $10 for a coffee whose beans had been trodden on by the pedicured feet of peasants who live in the clouds and never talk to strangers.
That was the vision presented just a couple of years ago by former CEO Howard Schultz.
He promised there's be 1,000 of these glorious tasting rooms by the end of 2017.
But here we are in 2019. Millennials have less money than everyone hoped they'd have.
And Schultz's successor, Kevin Johnson, has decided that there will be, oh, only six to 10 of these Reserve stores for now.
As the Wall Street Journal reports, Johnson has sniffed the poshification of Starbucks and decided it's not really for him. He told the Journal:
One thousand was an aspiration.
And six to 10 sounds like desperation.
I worried when Schultz said the Starbucks brand could ascend to the levels of high-quality wine, there to be sniffed, sipped and savored.
At the time, I feared it would be like McDonald's suddenly offering a $10 burger.
For his part, Johnson has the luxury of being a numbers man.
And the numbers appear to be telling him that those who want to pay a little more for their artisan coffee will go to the sort of place that's staffed by the bearded and the sincere and actually offers a slightly more refined Brooklynite experience.
Equally, the likes of McDonald's and Dunkin' are offering a perfectly decent cup of coffee for a lot less than Starbucks.
Which leaves Starbucks having to make more money from the middle.
Which is an uncomfortable place to be.
If you go to many a Starbucks right now, you'll find yourself becoming increasingly frustrated because the baristas are busy making drinks for those who have ordered via the very successful app.
Worse, some stores are becoming crowded with those taking advantage of the company's relatively new open-door policy, as I discovered on a trip to New York last year.
From this conflagration of aspects, Johnson is being pressured to make more margin.
This might involve more creative drinks and food. It might involve better customer service.
But these ingredients would need to be unique -- and uniquely profitable -- for his financial targets to be met.
Currently, I can't say that much of Starbucks' food offering is enticing.
Starbucks is also touting its expansion of delivery, but is this truly so enticing?
I understand that many companies want to pander to Americans' penchant for laziness, but delivery brings with it many issues.
Would Starbucks really deliver my morning coffee to my house? And how much might that cost? How long might I have to wait, as surely so many people want their coffee first thing in the morning?
It seems that Johnson is preparing to grind it out. (My apologies.)
How, though, might customers react?
A lot will surely depend on whether the chain can truly present unique standards in both its food and its drinks.
But when you're being pressured by financial types, raising your standards can be hellishly difficult.
Bean Counters don't necessarily know their beans.