Thursday, January 31, 2008

Starbucks Watch

I've long been fascinated by Starbucks because they managed to sell America not on a product, but on a miniature lifestyle. They called "third place," but I think of it more as the old office water cooler. Suburban Starbucks have their own logic, but in cities, Starbucks has replaced the water cooler as the place employees go to hang out for 10 minutes while taking a break. And they pay $4 to do.

The problem with selling a lifestyle and not a product is that "lifestyle" is even easier for competitors to duplicate. If you've been following the news for the last couple months, Starbucks is in a panic because first Dunkin Donuts and now McDonalds are coming after it.

Starbucks' first move to fight back is axing their inedible breakfast sandwiches. (Actually, their pre-first move was to launch a test program in Seattle with $1 coffee and free refills.)

Seems like a smart decision to me. The sandwiches were outside the company's core competency and didn't really fit with what they were selling. Starbucks was never going to be a place people go to for nutritional sustinence.

Expect to see more big changes.

4 comments:

Anonymous said...

That's really funny, 'cause I like the breakfast sandwiches. I mean, yeah, they're incredibly expensive and hotter than the sun, but they're kinda good, right? Right?

I didn't think they were inedible; they're certainly not great, though. If I had to rank breakfast sandwiches, I'd go:

1. McGriddle (unreal)
2. Croissandwich (very greasy, very good)
3. McMuffin (can pretend it's good for you)
4. Jack-in-the-Box (good value)

Anonymous said...

That's really funny, 'cause I like the breakfast sandwiches. I mean, yeah, they're incredibly expensive and hotter than the sun, but they're kinda good, right? Right?

I didn't think they were inedible; they're certainly not great, though. If I had to rank breakfast sandwiches, I'd go:

1. McGriddle (unreal)
2. Croissandwich (very greasy, very good)
3. McMuffin (can pretend it's good for you)
4. Jack-in-the-Box (good value)

Anonymous said...

As real wages decline during a recession coupled with inflationary period, i.e. the worst of both worlds, declines to static pay rates, and rising prices ... what happens to discretionary spending?

Starbucks is the first to get hit. It's expensive even at $1 a week. People can bring their own coffee or use the awful office coffee. Fast food will decline too as people cut back.

Starbucks was built on $4 lattes. I don't think they can do well when people don't buy that stuff -- they're not structured to serve a lot of cheap coffee fast.

And "lifestyle" stuff goes out the window in a recession.

jake said...

Kind of off topic, but my family and I recently moved to Singapore and they have Starbucks' everywhere. Some malls, like the Suntec Mall for instance, have two! But anyway, the starbucks here is incredible. The coffee is just better than the SB's in the states. I always Starbucks' coffee was to bitter, but here, it's awesome. tastes right every time. Although, I did make the mistake of trying one of there little mini quiche's, I figured it would be like the kind they make at Penera's, and I about threw up. It was like a glob of spinach in a half cooked egg pie. Jeez. But, again, the coffee is great. They even heat the milk and add it for you instead of making you go over to the little condiments bar and poor the half and half out of one of those thermos containers. You know the one, it has flies buzzing around it and you half expect it to be spoiled when you poor it in.