(You know …. I really feel I could have told Mr. Schultz all of this a long time ago. However — and, believe me, I’m as baffled as you are here — I don’t seem to be in his confidence.)
By JANET ADAMY, The Wall Street Journal
In a blunt memo to executives, Starbucks Corp. Chairman Howard Schultz warned that the fast-growing chain may be commoditizing its brand and becoming more vulnerable to competition from other coffee shops and fast-food chains.
Mr. Schultz sent the memo to top Starbucks executives on Feb. 14. in an email with the subject line “The Commoditization of the Starbucks Experience.” It first appeared on the Web site starbucksgossip.com. A Starbucks spokeswoman confirmed the memo’s authenticity.
“Over the past ten years, in order to achieve the growth, development, and scale necessary to go from less than 1,000 stores to 13,000 stores and beyond, we have had to make a series of decisions that, in retrospect, have lead to the watering down of the Starbucks experience, and, what some might call the commoditization of our brand,” Mr. Schultz wrote in the memo.
“Many of these decisions were probably right at the time, and on their own merit would not have created the dilution of the experience; but in this case, the sum is much greater and, unfortunately, much more damaging than the individual pieces,” he wrote.
Mr. Schultz went on to write that when the company switched to automatic espresso machines – which are now in thousands of its stores – “we solved a major problem in terms of speed of service and efficiency,” he wrote. “At the same time, we overlooked the fact that we would remove much of the romance and theatre.” Starbucks used to have all its baristas pull espresso shots by hand.
That move “became even more damaging” because the new automatic machines “blocked the visual sight line the customer previously had to watch the drink being made, and for the intimate experience with the barista,” he wrote.
Mr. Schultz wrote that Starbucks switched to a “flavor locked packaging” for its coffees that eliminated the task of scooping fresh coffee from bins in stores and grinding it in front of customers. “We achieved fresh roasted bagged coffee, but at what cost?” Mr. Schultz wrote. “The loss of aroma — perhaps the most powerful non-verbal signal we had in our stores.”
Mr. Schultz also wrote that changes in the store design process had created “stores that no longer have the soul of the past … Some people even call our stores sterile, cookie cutter,” he wrote.
“While the current state of affairs for the most part is self induced, that has lead to competitors of all kinds, small and large coffee companies, fast food operators, and mom and pops, to position themselves in a way that creates awareness, trial and loyalty of people who previously have been Starbucks customers. This must be eradicated,” he wrote.”
“Let’s be smarter about how we are spending our time, money and resources,” Mr. Schultz wrote toward the end of the memo. “Let’s get back to the core.”
Starbucks spokeswoman Valerie O’Neil said the memo is “a reminder of how success is not an entitlement. It has to be earned every day,” she said. “We can’t embrace the status quo.”
Romance and theatre? Intimate experience?
I guess those of us who only order “Coffee. Black.” are getting the quickies. The wham-bam-thank-you-ma’am of the coffeehouse.
That must feel very vindicating, tracey, after all the stuff you went thru. 🙂
I agree, too – even though I was never a big starbucks drinker. More of a Dunkin Donuts girl myself. But the novelty (and yes, Starbucks was a novelty – not just because of the coffee – but because of the atmosphere in those stores – especially here in Manhattan where it seems like nobody ever STOPS MOVING) … anyway, the novelty has definitely worn off.
O.K., after Lisa’s comment I will be snickering every time I’m asked, “Room for cream?” (And sadly my response is “no”–milk allergy!) So if I’m pouring my own coffee at the convenience store, does that mean I’m. . . nahhhh.
Sheila–my mom’s a major Dunkin’ Donuts drinker. I think she’s been refusing to visit me b/c the DD across the street from my apartments isn’t done remodeling yet. 🙂
Lisa — Yeah. It’s like, “Dude, it’s coffee, not sex.”
Btw, you “wham-bam-thank-you-ma’amers” are my favorite customers. (Hm. What does that make me, then, in his little intimacy scenario?) Still, I love the quickies — low maintenance, less whining.
Sheila and Kate — I’ve heard that Dunkin’ Donuts has great coffee. We don’t have any out here.
It’s worth the trip, Tracey, as their long-ago slogan used to say. They’ve done pretty well keeping up with changing times.
Howard Schultz probably earns a salary more easily measured in scientific notation, and he STILL can’t say “fewer than 1000 stores”??!?? And what kind of Blinding Flash of the Obvious is this memo, anyway? Pay me a hundred large and I’ll write the memo correctly and give you the same cutting-edge information. PS – quit selling CDs, Mr. Schultz. You’re not a real neighborhood coffeehouse and nobody believes that your baristas really listen to that stuff; and if I wanted a CD with my coffee I’d go to the snack bar in the local Brobdignagian book shop: wider selection of music and the coffee is usually better too.
Nightfly, in my line of work I’ve seen malls fighting with Starbucks about selling music/digital media a lot, because of the other stores who, you know, do that as their main thing, and are pretty miffed. Then again, it seems every other business sells CD’s and cell phones if they think it will bring in sales.
NF — You’re cracking me up, getting all pissed at Howard Schultz for his bad grammar. Yeah, dude, come ON! My English teacher mom always said it this way: If it’s countable in separate units, it’s “fewer”; if not — if it’s considered in bulk — it’s “less.”
For instance, Mr. Schultz:
fewer dollars
BUT
less money
You know, things that people can spend at any coffeehouse other than Starbucks.
Sigh …. I’m sure you won’t listen to me about this, either.
I can’t convince my boss either, so I must bite my lip every time a tenant has an operating requirement: “If LESS than three (3) department stores shall be open for business. . .” Yep, that’s our standard language. I lobbied for a change and was shot down. (And I have a B.A. in English Literature!)
I guess the moral of the story is, the worse you write, the better your salary? It’s not as if I’m typing these well-punctuated sentences from my vacation home in Aspen, y’know.