Is Starbucks a brand in declination and a failing business? Has the reality of paying $8.00 for a latte finally hit bean bottom of a pitless pocketbook as people realize they can no longer afford fancy coffees if they can’t first pay their mortgages and mounting credit card bills?
Recently, Starbucks closed all their stores for three hours to retrain all their baristas. During that retraining, Dunkin’ Donuts offered free coffee for those who craved the bean and that move offered a smart counter-promotion to bring new people into Dunkin’ for a sip and swallow.
Why Starbucks had to “close” all of its stores for three hours for training was a strange happening because it indicated — intended or not — a public revelation that there could be trouble, and not just coffee, brewing on the Starbucks horizon.
Yesterday, that brand implosion was confessed in the public square:
Chief Executive Howard Schultz told the company’s annual meeting there was no “silver bullet” for fixing Starbucks, whose stock has dropped 40 percent over the last 12 months.
Can Starbucks, with 15,011 stores in 42 countries compete and survive against the monolith that is McDonald’s with 35,000 stores in 120 countries and its plan to sell premium coffee? A year ago, Consumer Reports did a taste test and preferred McDonald’s coffee over Starbucks:
We compared the rivals with Starbucks, all in basic black–no flavors, milk, or sugar–and you know what? McDonald’s beat the rest.
When McDonald’s beats you in your own niche — that’s A Bad Thing.
Emboldened by rave reviews for the relaunch of its coffee business 18 months ago, McDonald’s is planning to roll out premium coffee drinks — including smoothies, frappes and bottled beverages — priced just below that of Starbucks. The goal: to gain a bigger share of the $60 billion U.S. coffee business, of which the burger chain now says it holds about $6 billion.
Is “grinding beans in stores to create aroma” enough to spark a Starbucks comeback?
Can Starbucks survive this financial tailspin using brand allegiance, increased quality of product and a continued effort to create a relaxing environment — or must more brutal changes be made? How would you save the stores and resurrect the Starbucks brand?