"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. And I’ve been jotting them down. So far we’ve seen:
1. Better coffee: 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.
2. Worse coffee: Pike’s Place Roast. 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.
3. The nostalgia effort: Trying to “return to our core – all things coffee” and conjure up some nostalgia, Starbucks reintroduced the old icon of the mermaid, with a brown logo carrying a tagline “Roasting Coffee Since 1971.”
4. 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…
5. 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.
6. A mystery concoction: There’s a new concoction that Schultz refers to as “a game-changer in the coffee space, something in a cup.” I believe this is the Sorbetto frozen beverage that the ‘Bucks released in LA & OC early in July.
7. Ditch the music label: Yes if you didn’t know, Starbucks started a record label called HearMusic. It even has its own XM channel (now Starbucks XM Café). But 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.
8. 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).
9. 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.
10. 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. Check them out.
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: Now you can join a Starbucks social network where you can share your ideas, engage in conversations, and play a role in shaping Starbucks future.
So which tactic will help this ailing iconic brand? Better coffee, or worse coffee? Breakfast sandwich or not?