I think the author is missing something here. They may not want a Lavender Latte or the sugar-of-the-month drink, but many young women, myself included, do. Starbucks is going the way of many brands, targeting the female demographic because they know we are big spenders. They wouldn't prioritize making a new refresher, unless this is something that sells. As a woman, I never go to Starbucks for coffee or atmosphere for the same reason that the author states, I can go to a local coffee shop instead or even make coffee at home. What I cant make at home is a unicorn Frappuccino or a Summer Berry Refresher. We all may not like the 'TikTokfication' of brands like Sephora trying to cement themselves in the mind of the Gen Z and Alpha ladies, but if it has proven profitable, why would they not? It is easier and much cheaper overhead to make a Blue and Purple drink then it is to increase store cleanliness, seating space, and staff paid well enough to enjoy their job. If Starbucks was to fix itself, it would essentially being saying to the high-volume shareholders: "Hey, lets sacrifice some YOY profit, invest in our stores, ingredients, & employees to make improvements that better our business." I highly doubt the high-volume shareholders and going to let this happen when they can just embrace the bright color, sugar rush market shift. Even though we all hate what it has become, Shareholders want their business to become the next Sephora because that is where the money is. It's just capitalism
You make fair points but I don't think its in Starbucks long-term interests to chase various drink trends. It should anchor to coffee first as the strong foundation if it wants to justify its higher prices. Trends come and go. Coffee -- and also tea -- are Lindy.
However, if Starbucks does want to shift itself entirely to a chase trends type of brand, it needs to go all-in on the volume, mobile and probably lower its prices. Which is fine if thats the strategy it chooses but it's kind of in the messy middle right now. Charging premium prices on its core products while not delivering the same experience it did when it built a loyal following in the 90s and 00s.
Being a Starbucks fan (and shareholder) for years, I have seen the deterioration from the lovely in-store experience to serving primarily take-out or drive-in customers, since covid lockdowns, and have been very frustrated. In Europe things are not that bad; Starbucks locations remain primarily meeting or remote work places.
It definitely is capitalism (nothing wrong with that), but I think what the author is also saying here is that the fuller embrace of the pink drinks/on-the-go volume is actually HURTING business. SBUX is caught between the third space and the morning rush commute via mobile app. You used to be able to sit down and have a choice of seating and maybe get some work done. Now, due to COVID adjustments that haven't gone away, there's almost no seating available at a lot of the shops I go in and I never see "drink staging areas" with my sugar and creamer sitting there waiting for me to dress up my latte. I have to bug the busy barista making the 20 pink drinks that I want a pack of Splenda. Overall, it's not a great place to hang out like it used to be, though I'm sure there are some locations doing a decent job at both roles. There's a ton of money to be made for sure on selling the fancy Lavander lattes, but the high price, long wait times, and lackluster shop experience (is anybody sick of their food offerings?) is threatening their long-term success. Great article Trung!
I think a way to thread the needle is, Statbucks can either:
1) Go full on mobile/efficiency/sell as much as possible angle but it can't charge premium prices (lower margins offset by higher volume)
2) Try to keep higher prices, but they will have to take foot off the volume pedal...market wise, it could still be rewarded for better margins and stronger brand
As a Starbucks shareholder from the original IPO in the early 90's, I keep a close eye on the company and how they are doing. (Side note: my original investment is now worth 160 times what I originally paid.) I found your article very enlightening, and it is probably on target for what is going on with the company right now, but I rarely patronize the brand because I have an old-school hesitance to pay more than $1 for a cup of coffee, maybe $2 for a quality cup, so I can't base my following comment on personal experience.
Comment: If, as your article indicates, there are so many Starbucks stores that are ruining the "experience" with higher margin foo-foo drinks ordered on the app, it seems reasonable to conclude, as you did, that the company is (intentionally or not) disregarding their most loyal walk-in customers for "convenience customers" and transactional revenue. I wonder if Starbucks has considered the potential of designing stores to cater to both groups; stores split into two sides with one staffed exclusively for drive-through app rush puppies, while the other side of the store staffed exclusively to provide the original in-store community experience? My few personal observations finds baristas are trying to do both jobs, which causes problems for both drive-through and in-store customers. I live in a smaller metropolitan city and have to say the newest store design here makes customers parking and walking in a challenge to dodge the drive-through traffic - just another reason not to patronize the brand.
Thanks for the read Tim! And, damn, thats one awesome buy and hold re: SBUX.
You mention the split store idea. I could definitely see where this is headed, especially if they want to add more dinner stuff (which this trial they are doing with GoPuff may point to...for selling more product from 5pm to 5am).
100%. You nailed it. I started my professional career in 2000. Every morning at 6am the same two baristas would chat me up, make my latte, and write fun one-liners on my cup. Very much a 3rd place pull. Nowadays the counter person stares at me blankly when I ask how their day is going...
The early 2000's was a great customer service era in general; hotels like Kimpton (soul lost), retailers like Office Depot (soul lost) all focused on making the customer experience something special. Hopefully its a trend that will return.
Apple is facing similar challenges, as seen in their recent 'Crush' ad which sparked quite a bit of backlash.
But the situation with Starbucks is even more intriguing.
The unintended consequences of their successful digital transformation are distancing the brand from the community-centric ethos that originally defined it.
How do they bounce back from this?
Perhaps they could consider splitting their operations within each store, much like a dark kitchen concept for restaurants. This way, staff dedicated to in-store customers won't be overwhelmed by mobile orders, allowing each group to receive more focused and personalized service. Could this help Starbucks reconnect with its 'Third Place' philosophy?
Somewhat related, products like "pumpkin spice latte" have something to do with the change in emotions around the Starbucks coffee experience. Vox has a good piece covering this.
There are so many things wrong with Starbucks now you could fill a book. It started with the lockdowns. They said they were here for you yet every time you’d pass one it was closed. If you found one open the line would be so long it wasn’t worth it.
Starbucks is no longer a hangout place. They’ve downsized their stores (like many other establishments) to the point that it is no longer a comfortable place to chill out.
Service stinks. I placed a mobile order Sunday, since my wife prefers their iced tea. 15 minute estimated time at order. Go into store and wait another 15 minutes. 30 minutes for an order ahead iced tea. Unacceptable !
In the day, if you waited longer than 4 minutes or they didn’t have what you wanted it was FREE. Not any more. Now it’s common to spend 20 minutes and a 1/8 tank of gas at a drive thru. All of this and overpriced stuff too. Also the food options have been reduced to practically nil.
I used to add $20 to my card every 3-4 days. No more. If it weren’t for my wife’s preference of the tea Starbucks would be a memory.
I think the author is missing something here. They may not want a Lavender Latte or the sugar-of-the-month drink, but many young women, myself included, do. Starbucks is going the way of many brands, targeting the female demographic because they know we are big spenders. They wouldn't prioritize making a new refresher, unless this is something that sells. As a woman, I never go to Starbucks for coffee or atmosphere for the same reason that the author states, I can go to a local coffee shop instead or even make coffee at home. What I cant make at home is a unicorn Frappuccino or a Summer Berry Refresher. We all may not like the 'TikTokfication' of brands like Sephora trying to cement themselves in the mind of the Gen Z and Alpha ladies, but if it has proven profitable, why would they not? It is easier and much cheaper overhead to make a Blue and Purple drink then it is to increase store cleanliness, seating space, and staff paid well enough to enjoy their job. If Starbucks was to fix itself, it would essentially being saying to the high-volume shareholders: "Hey, lets sacrifice some YOY profit, invest in our stores, ingredients, & employees to make improvements that better our business." I highly doubt the high-volume shareholders and going to let this happen when they can just embrace the bright color, sugar rush market shift. Even though we all hate what it has become, Shareholders want their business to become the next Sephora because that is where the money is. It's just capitalism
Hey Mary!
Thanks for the read and follow-up note.
You make fair points but I don't think its in Starbucks long-term interests to chase various drink trends. It should anchor to coffee first as the strong foundation if it wants to justify its higher prices. Trends come and go. Coffee -- and also tea -- are Lindy.
However, if Starbucks does want to shift itself entirely to a chase trends type of brand, it needs to go all-in on the volume, mobile and probably lower its prices. Which is fine if thats the strategy it chooses but it's kind of in the messy middle right now. Charging premium prices on its core products while not delivering the same experience it did when it built a loyal following in the 90s and 00s.
Best write up I’ve seen on the SBUX mess. Thanks.
Appreciate the read, TRW!
I didn't do a deep dive on financials but those LI replies were GOLD...and felt like they caught a vibe.
Another great post, thank you!
Being a Starbucks fan (and shareholder) for years, I have seen the deterioration from the lovely in-store experience to serving primarily take-out or drive-in customers, since covid lockdowns, and have been very frustrated. In Europe things are not that bad; Starbucks locations remain primarily meeting or remote work places.
Thanks for the read (and share on X), Theologos!
Thanks for the read (and share on X), Theologos!
It definitely is capitalism (nothing wrong with that), but I think what the author is also saying here is that the fuller embrace of the pink drinks/on-the-go volume is actually HURTING business. SBUX is caught between the third space and the morning rush commute via mobile app. You used to be able to sit down and have a choice of seating and maybe get some work done. Now, due to COVID adjustments that haven't gone away, there's almost no seating available at a lot of the shops I go in and I never see "drink staging areas" with my sugar and creamer sitting there waiting for me to dress up my latte. I have to bug the busy barista making the 20 pink drinks that I want a pack of Splenda. Overall, it's not a great place to hang out like it used to be, though I'm sure there are some locations doing a decent job at both roles. There's a ton of money to be made for sure on selling the fancy Lavander lattes, but the high price, long wait times, and lackluster shop experience (is anybody sick of their food offerings?) is threatening their long-term success. Great article Trung!
Thanks for the read, Fernando!
I think a way to thread the needle is, Statbucks can either:
1) Go full on mobile/efficiency/sell as much as possible angle but it can't charge premium prices (lower margins offset by higher volume)
2) Try to keep higher prices, but they will have to take foot off the volume pedal...market wise, it could still be rewarded for better margins and stronger brand
It's kind of in the middle ground rn
As a Starbucks shareholder from the original IPO in the early 90's, I keep a close eye on the company and how they are doing. (Side note: my original investment is now worth 160 times what I originally paid.) I found your article very enlightening, and it is probably on target for what is going on with the company right now, but I rarely patronize the brand because I have an old-school hesitance to pay more than $1 for a cup of coffee, maybe $2 for a quality cup, so I can't base my following comment on personal experience.
Comment: If, as your article indicates, there are so many Starbucks stores that are ruining the "experience" with higher margin foo-foo drinks ordered on the app, it seems reasonable to conclude, as you did, that the company is (intentionally or not) disregarding their most loyal walk-in customers for "convenience customers" and transactional revenue. I wonder if Starbucks has considered the potential of designing stores to cater to both groups; stores split into two sides with one staffed exclusively for drive-through app rush puppies, while the other side of the store staffed exclusively to provide the original in-store community experience? My few personal observations finds baristas are trying to do both jobs, which causes problems for both drive-through and in-store customers. I live in a smaller metropolitan city and have to say the newest store design here makes customers parking and walking in a challenge to dodge the drive-through traffic - just another reason not to patronize the brand.
Tim C.
Lincoln, NE
Thanks for the read Tim! And, damn, thats one awesome buy and hold re: SBUX.
You mention the split store idea. I could definitely see where this is headed, especially if they want to add more dinner stuff (which this trial they are doing with GoPuff may point to...for selling more product from 5pm to 5am).
Will be interesting to watch in following years.
100%. You nailed it. I started my professional career in 2000. Every morning at 6am the same two baristas would chat me up, make my latte, and write fun one-liners on my cup. Very much a 3rd place pull. Nowadays the counter person stares at me blankly when I ask how their day is going...
The early 2000's was a great customer service era in general; hotels like Kimpton (soul lost), retailers like Office Depot (soul lost) all focused on making the customer experience something special. Hopefully its a trend that will return.
Thanks for the read, Andy!
And great call-out on Office Depot and Kimpton.
Great post!
Apple is facing similar challenges, as seen in their recent 'Crush' ad which sparked quite a bit of backlash.
But the situation with Starbucks is even more intriguing.
The unintended consequences of their successful digital transformation are distancing the brand from the community-centric ethos that originally defined it.
How do they bounce back from this?
Perhaps they could consider splitting their operations within each store, much like a dark kitchen concept for restaurants. This way, staff dedicated to in-store customers won't be overwhelmed by mobile orders, allowing each group to receive more focused and personalized service. Could this help Starbucks reconnect with its 'Third Place' philosophy?
Appreciate the read, Martin.
Dark Kitchen style could be interesting. Not sure how many locations could fit that dual split (with enough SQFT) but interesting idea for sure.
Somewhat related, products like "pumpkin spice latte" have something to do with the change in emotions around the Starbucks coffee experience. Vox has a good piece covering this.
https://www.vox.com/culture/2018/8/29/17791082/pumpkin-spice-latte-starbucks-backlash-explained?ueid=585de213d253b929e429770dc5357233
There are so many things wrong with Starbucks now you could fill a book. It started with the lockdowns. They said they were here for you yet every time you’d pass one it was closed. If you found one open the line would be so long it wasn’t worth it.
Starbucks is no longer a hangout place. They’ve downsized their stores (like many other establishments) to the point that it is no longer a comfortable place to chill out.
Service stinks. I placed a mobile order Sunday, since my wife prefers their iced tea. 15 minute estimated time at order. Go into store and wait another 15 minutes. 30 minutes for an order ahead iced tea. Unacceptable !
In the day, if you waited longer than 4 minutes or they didn’t have what you wanted it was FREE. Not any more. Now it’s common to spend 20 minutes and a 1/8 tank of gas at a drive thru. All of this and overpriced stuff too. Also the food options have been reduced to practically nil.
I used to add $20 to my card every 3-4 days. No more. If it weren’t for my wife’s preference of the tea Starbucks would be a memory.