Posts Tagged Starbucks

Pricing a Cup of Coffee

I’m not an economist, but I have trouble understanding how in the midst of a life-changing economic climate, Starbucks decided to drop some prices (on basic pours) and increase prices on more elaborate drinks. This comes at a time when people are questioning how much they should pay for a cup of coffee. With competition among the brewers an on-going price war, why would they decide to raise prices now? (If you think you’ve escaped the increases or not received the reductions, stay tuned: Pricing varies by location and the new pricing rollout will eventually affect all the stores).

Yes, there are some signs we are moving, OK, crawling out of the demise, but every analyst has said we are not the same in our spending patterns as we were a year ago. If a year ago we had two Starbucks specialty drinks a day, we now are more likely leaning toward the basic drip. That’s funny, they are less costly and now they are the focus of reduced pricing. I feel like I need a quick course in psychology or logic to truly understand the process. They’re lowering prices on lattes and brewed coffees and raising them on Frappuccinos which as far as I can tell require little more than a push of a blender button.

The question to ask is who will buy the drinks? If there are more customers complaining about high costs, and they’re still Starbucks customers, will this strategy flip them over the edge? Of course, it’s hard to know, and it’s easy to second-guess. The concept just seems illogical.

When does a cup of coffee become just a cup of coffee? Starbucks created a coffee experience: A place, a destination with an expansive menu of almost unlimited combinations. We are different now. People seem to linger with their non-fancy brewed coffees.

Obviously, McDonald’s and its McCafe specialty drinks are proof that price matters and people are willing to forgo an experience in favor of affordability.

Get your coffee sleeves ready.coffeeCups01

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When Branding Backfires

coffeecups-150x150The last few years have seen the emergence of branding experts: Individuals who espouse the importance of gaining a market foothold by being a recognizable, trusted brand.

That pattern clearly worked for Starbucks as they became the coffee brand–they were at one with the term. Now that the economy is questioning how much individuals are willing to pay for a cup of coffee, their brand has suffered greatly. They have tried numerous tactics to establish or re-establish themselves in the marketplace. Search the company’s name in my blog to follow their various strategies.

Yet, today there is news that questions their allegiance to the brand game. In an about-face, they decided to use their homegrown audience, Seattle, and test market dropping the Starbucks name in some locations and renaming the stores based on individual locations. The goal is to create a neighborhood feel without a big brand name and become more of a coffeehouse that serves alcoholic beverages and offers live music.

I can see it now in New York City with its 5 boroughs and strong neighborhood affiliations: There could be names like 5th Avenue Beans or Gramercy Joe’s. Test the concept for your area by playing the local renaming game. Maybe they should hold a nationwide contest and let people in the communities rename the stores!

This is a clear wait-and-see approach to marketing. The irony, of course, is that they wanted to be every neighborhood’s favorite store, but the brand’s proliferation on every corner created a backlash.

I think it is an interesting strategy, but reverse branding has its own set of problems including marketing and renaming costs. Are individuals that naive that this week’s newly opened “Corner Java,” which last week was the closest Starbucks, is now their favorite coffeehouse?

We’ll see.

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Food and Drink Giveaways

July is starting to look like a fabulous month as everyone wants our attention. Remember it is a month of food holidays. Promotions like these should make it extra easy to get us into line.

Starbucks decided they need to connect better with the Facebook universe. To show their enthusiasm and support of National ice Cream Month, from now through July 19th, Facebook users can sign in and friendster someone with the Starbucks free pint ice cream coupon. If you want to understand its popularity, (not a small number; 800 pints an hour), the ice cream pints for the day may sell out and you’ll need to revisit to take advantage.

McDonald’s, which continues to wrestle up new coffee ideas and lay claim to enticing more ardent coffee drinkers to their side of the road, has a thirst-quenching Monday offer: Free Mochas on Mondays starting this Monday, the 13th until August 3rd. These will be available hot or iced from 7 AM-7 PM on these hot summer Mondays. The company figures they’ll be pouring over 10 million cups on Mondays with the hope that they’ll have found new fans who’ll return any day of the week.

More offers toimages come.

Love how everyone is fighting for our attention!

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The Numbers Are In

Those Zagat people, Nina, Tim, and their army of contributors, are at it again! Instead of an eponymous city guidebook, they asked over 6,000 people to rate their favorite fast food establishments: The Survey ranked 103 chains from surveyors who order fast food at least 11 times a month! Wendy’s was the overall Mega-Chain winner, and the West Coast’s popular In-N-Out Burger took top honors for a food chain with fewer than 5,000 outlets. Trust me, when you grab a burger at one of its locations in 4 states (CA, NV, UT, or AZ), you’ll understand what the fuss is about! They earned top honors for Best Burger, too.

Maybe Starbucks is the real winner of the survey as it grabbed top honors in the Quick Refreshment Category as the most popular spot, and the company earned major bragging rights for Best Coffee even though they have been attacked by every barista and quick coffee shop within its sights.

McDonald’s, which is working hard to earn a coffee title, managed top numbers for Best French Fries, Best breakfast, Best Drive-Thru, and Best Value. The latter category is doubly important this year at all levels of food purchasing–everyone is looking for value.

Were there surprises? Not necessarily, but in the full-service category, I love the fact that the International House of Pancakes, IHOP, top_store_1won Best Breakfast and Chuck E. Cheese still wins the Most Child-Friendly category.

The more things change; the more they stay the same!

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Score One for Starbucks

starbucksicedOK, I’ve been pretty harsh with the revivalist techniques at Starbucks and still have plenty of complaints–slow service and chatty baristas not paying attention to their product. Today, I give them a win.

Let me just answer your question: Yes, I still go to Starbucks, but I know what to order–nothing fancy. Nothing costly. The plain seasonal Jane: an iced unsweetened grande coffee, or as the guy behind me added to his order, lite ice. Hmm. Always a one-upmanship–he was right. Maybe one of the better buys: $1.95.

Anyway Starbucks offers the flexibility as in no two people order the same–everyone personalizes it, and the staff just repeats the order. That is a process they understand.

Heard from a friend yesterday who had an obviously nightmarish coffee exchange that bordered on ridiculous. Looked at Dunkin’ Donuts menu board as she was treating herself to a much needed and long-missed latte and then had an are you kidding me exchange. I’ll have a decaf lite latte, please. Make that iced. Counter guy says, $4.19 (before tax); customer says, board says $3.19. He says that’s for hot. She says, so? He says a buck more for iced. Are you kidding? Nope. Ice does not cost a dollar. Yep. They went back and forth–he won, she bought. BOO.

That whole exchange is ridiculous. Ice is water and water in a product just makes more water–the melting coefficient is that the company would save on the amount of coffee they were pouring. Most disappointing part of this exchange is she purchased it.

I had to see it to believe it. Walked in today and bingo, same experience, but a new more polished explanation–we add more milk, it’s different. Yes, it is different; unnecessary, a waste of money. I knew what to do: I left.

Just for the record they do sell a 95 cent iced coffee, but it is a pre-made product with sugar. Not the same.

Lose a customer; tell a million people–that’s a win. Figure they owe her more than goodwill since she’ll avoid them and order her iced latte and add her own milk from the counter containers.

Dunkin’ Donuts, you are wrong.

So ridiculous.

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The New Starbucks–Again

When does reinvention get old? I’ve been wondering about Starbucks for months nowsbuxI’ve written about the reinventions, but everytime I think I am over it or the news is old, more comes in. They have been at war with McD’s and Dunkin’ and everyone else who owns a coffee cup. They were number one and have been beating back the grounds to get back on top.

Maybe it was the economy that started the downward spiral.  Maybe it was the cost of a cup itself or the sloppy training. Lots of maybes but no solid answers. Meanwhile everyone with a coffee machine seems out to get them. Starbucks responds with an almost endless list of promotions. Today they may have the ultimate shoot oneself in the foot move: Coupons for products at grocery stores. I do remember they tried a version of that a few years back when they introduced ice cream. Now they plan to issue coupons (starting May 11) for ice cream, cold beverages, and packaged coffee. You can have your Starbucks in multiple places is what the coupons are supposed to be saying. Maybe they are saying, buy us, please. They credit their Starbucks idea website with this suggestion. They obviously ignored my comment that said the pairings are a problem.

I still frequent several Starbucks; after all, they answer the meet up question in a city without too much coffee competition in the neighborhoods (not talking the business district).

I just want them to get it right. I want to be able to walk in the newly formatted, friendlier space and be greeted by a staff that knows how to make a real cappuccino, a macchiato–how the foam matters. Check out Macchiato in New York City for that answer.

Show me.

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How Big of A Knife Do You Need?

cleaverJust a regular steak knife does not seem big enough to slash prices at many steak restaurants. Morton’s, The Palm, Ruth’s Chris, and Sullivan’s have all advertised promotions. The one from The Palm today may prove the most shocking as it demonstrates how much money they are now willing to accept to get you in the door.

If you are an email subscriber or a member of their frequent guest club, your inbox greeted you with a coupon offer valid until the end of May: “Our Biggest & Best Filet Mignon Dinner Offer.” The $39 a person promotion includes a starter, a 14 oz Filet, a Filet Mignon Oscar, or a wild Alaskan Halibut Filet and a choice of a side.

The continual flow of offers from The Palm parallels my earlier inbox overload of promotions from Starbucks. When they keep on coming, it feels just like a banner headline: We’ve got a problem, and here is today’s solution. Does it fill tables or coffee cups? You hope so for their sakes, but when you read between the promotional lines, you have to wonder.

Another company looking at ways to fill tables is Chicago-based Lettuce Entertain You which is once again offering triple points for their members when they dine out this coming Monday, April 27. Are triple points the right incentive or was this promotion so successful that it will be repeated monthly?

Promotions have found a friend in email lists. If you want a dining out deal, then sharing your email address with your favorite restaurant may be the smartest strategy of the moment. We haven’t even received the bulk of May promotions yet.

Just you wait.

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An Unnecessary Addition–Take It Off

Seriously, I do not need someone to tell me how much to tip. Some new restaurant “customer copy” parts of the receipt have the suggested amount for 15%, 18% and 20 % tips. Glad they stopped there. I know what to tip and why.

This is starting to feel a lot like a Starbucks tip jar. I order, you serve, I tip. I have been known to tip no less than 15 % and as high as 25%. I tip for good service and not just delivery. By the way, I do tip the delivery guy at least 10% and the carry-out person 10%. I get frustrated by poor service and sloppy table rituals: Wait, I’m not done with the wine, put the glass down. I recognize that being a server or a waiter is hard work and most work for the potential of tips.

I just do not like a restaurant to assume that my addition skills are so poor that I cannot figure out what to do when dining out. I could always turn over the bill, use the provided pen and practice my multiplication tables and come up with something pretty good–start with 10% of a dollar is X and then go from there!

I hope some fancy restaurant point of sale software system is not including this end note on all receipts. It truly is unnecessary. Good service is what it’s all about. If the chef can’t get the dish right, the server merely brought it out, he didn’t underseason it or over pepper it. Blame the chef but don’t hold the server hostage.

Here’s my tip for you: don’t tell me. Let me decide the right amount. Most people can come up with a fair response.

I can do it.tip-jar

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Still NOT Quite Right

OK, remember me, I said you could pull it out. Well, I was almost right, and almost only counts in horseshoes. For Starbucks to borrow a word from the food and wine world and come up with an affordable “pairing” is the good news. The bad is the insensitive, limited thinking approach.

It is true that bacon, sausage, and ham sandwiches may sound like the universe of sandwiches to many people. NOT everyone eats pork products. The new pairing promotion offers a 12-oz tall brewed coffee and a choice of a pork off-shoot sandwich. Or a tall latte and a slice of coffee cake or oatmeal. What happens if you want an egg sandwich, a turkey sandwich, or any number of other non-pork possibilities?

Seriously, who is doing your market research? The concept is good; the estarbucksxecution is a killer.

Think. Make the changes.

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Full Circle

sankaHard to believe what I just read–the word “Sanka” is in the information. “Sanka,” now my father would be happy to hear that word. I haven’t seen the word or the product in recent memory.  Once, very long ago, that word was synonymous with decaffeinated coffee, albeit in a little flavor type pak. Once not so long ago “Starbucks” meant freshly brewed coffee with almost unlimited possibilities regarding size, milk choices, foam, and flavorings.

It was like going to a candy store and taking one from each column: I”ll have a tall half caf skinny latte with a shot of vanilla–that’s what I mean. No two people ever seemed to order the same thing. That was part of the mystery, the fun. You could experiment each time you went in and order something til you figured out your specific flavor profile. They were happy to accommodate. They made your order sound normal.

Wow, that was so long ago. Way before the decaf decision, and definitely before yesterday’s news about a “soluble” product. That may be an industry word, but it sounds like it’s from the chemical industry not anything food-related.

What exactly is this new Via, which by the way means road, path or this case does it conjure up Robert Frost and imply the road not taken? This is definitely news. Not the type I was expecting.

Sure these are tough times, I’m the first to recognize that significance. People are cutting back all over the place and multiple shots are being replaced by fresh brews. Starbucks is trying to reposition itself but on the Via? Definitely a strategy to watch.

I wish them well. Just afraid of what’s next–they have had a new strategy each week. Do we start bringing our own milk?

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