Starbucks & the Local Coffee Shop

I've written about what I like and dislike about Starbucks and today a hat-tip goes to the THINKing Blog for pointing out another perspective posted at the MarketingTechBlog, which I'll share with you in a second.

First a brief history of Coffee Houses in Market # 103 (more or less), Fort Wayne, Indiana. We are the 2nd largest city in Fort Wayne and 8 years ago when my bride-to-be introduced me to coffee shops, all we had were local shops.

Higher Grounds, had a few locations, The Mill, had a combo coffee/bakery shop with a few locations in town, and there where a few others that struggled and as long as they had their niche, like live music perhaps a Victorian-style home, they hung around.

You had to drive 150 miles to find a Starbucks.The keys to the success for a coffee shop were good brew, pleasant place to hang out, and wireless internet.

These days there are three Coffee Shops I'll visit regularly. The recently renamed "Hill of Beans" which is about a mile from my office, that offers all of the above along with a tasty lunch menu. On the north side of town, where I live there is the Firefly, another one location shop that does well with the right mix of people, customers, food, and all of the above. Depending on where I am in my travels, I may also visit a Higher Grounds, based on convenience.

When Starbucks came to this part of Indiana, the local coffee shops were nervous, but the only ones that lost were the ones that were inferior anyway. When Starbucks announced they were cutting 600 stores, we lost two outside of town, in neighboring communities. I will visit Starbucks, briefly, or do their drive-thru on occasion, as the following article explains is what they want me to do. But Starbucks is still a minor player in my life, and I visit a coffee shop an average of 8 times weekly.

Starbucks: Inflation and Devaluation of a Brand

Posted in Advertising, Business, Food Service, Marketing by Douglas Karr at 8:54 pm

The United States really didn’t understand what coffee could taste like. Coffee grinds were flavored with chips for a long time that helped maximize the profits of coffee companies. I had a friend of mine that worked in a packaging plant who worked on the equipment that filled and sealed coffee containers. He told me they changed brands all night, but never changed the beans. We were all getting fed the same crap, disguised in different coffee cans.

Then Came Great Coffee

About the time I started to pay attention to how my coffee tasted was about the time I found the Norfolk Coffee & Tea Company. To this day I’ll tell you that there’s nothing quite like getting fresh roasted beans directly from the oven.

If you’re imagining it as some new wave, modern place for coffee snobs to meet and hobnob, you couldn’t be further from the truth. The inside looked like an abused factory… there was a coating of coffee and peanut dust on everything you looked at. You simply walked in, ordered your bag of grounds, and walked out. I have no idea where the beans came from, but they were terrific. The owners taught me about the new coffee makers that were out with no burners and insulated carafes. No burnt coffee. Mmmm.

Then Came Starbucks

About this time, I moved to Denver and left my new found discovery behind. In Denver, I searched for some coffee roasters but it just wasn’t the same. Starbucks had come to town, though, and I got a flavor for the burnt beans of the ‘bucks. I don’t think I ever got used to the cost or taste of those beans, though! I was spending 10 times the money on coffee than I used to!

I did enjoy the stores. I loved sitting down, logging onto the wireless (before they were charging for it), and getting some work done. They played cool music there (before they were selling it).

Then Came Hard Seats

Hanging out at Starbucks when they first opened was pretty sweet. Comfy chairs throughout, making it a great place to hold the impromptu meeting. The comfy chairs invited people to spend more time at Starbucks, though. I’ve read that many retail establishments put in hard seats so people won’t stay as long. Starbucks switched to larger stores and hard chairs with a comfy seat nary around.

Then Came the Auto-Shots

I remember the great signs greeting you at the ‘bucks:

Your Barista is Jane

Jane may have a splash of green hair and a couple piercings in odd places, but as she pulled a shot, you watched as she practiced her craft. She’d discuss your likes and dislikes off the drink options and make a couple recommendations to you based on her wealth of experience. You felt cool just being there and being paid attention to. You felt special.

But the lines grew bigger and the assembly line had to grow more efficient. New machines were brought in that automatically ground, packed and poured the shot. The magic was gone… no imperfection, no shots that took too long, too short or had too many grounds. Worse yet, baristas lost their knowledge of the craft. Barista’s were no less artists than someone flipping a burger at the local Burger King.

Then Came the Retail

As you stood in line, you were now surrounded by bags of beans, cups, mugs, insulated containers, chocolates, coffee makers, espresso machines, music CDs, newspapers… The store was starting to look more like a store than a third place, the place away from home and work where I wanted to spend time.

Then Came the Drive-Throughs

The lines were too long to carry on a conversation. The baristas were too busy to get to know you. Shifts of new baristas came and went, the “Your Barista is” was left blank. To fight the lines, the drive-through was installed. It’s more convenient. It’s faster. Bigger profits. More customers.

There was no option of a taste of the out of ordinary tailored to your fancy. Just the typical recommended drink of the day or an upsell to a coffee cake.

No thanks. Non-fat, no-whip, grande mocha please.

Eight dollars, drive around.

I’d listen to the radio as I’d pull around and hand them my cash and head for work. No greetings, no discussion of the weather. Just me and my car. The magic was gone. Starbucks, the experience as I had known it, had died.

The truth was that I don’t know that I was ever really in Starbucks for the coffee. Oh - I needed my fix just like everyone else, but I was in love with the brand, the style, the personality of the coffee house. I loved going there because I felt important. And when I paid $5 for a specialty drink, I felt even more important.

Somewhere along the way, Starbucks began shaving off the special in turn for profits and efficiency. They stopped making me feel important. They stopped making me feel special. They stopped being special. Starbucks is an amazing story - they inflated the price of a common drink and got us all hooked. But they couldn’t keep us. Growth, profit and efficiency took over and eventually squashed everything out of the stores that was unique.

The irony is that Starbucks devalued itself, no one else did it. No competitor came in and challenged them. When Schultz came back in January, I had big hopes. Oh well.

Then Came the Discounts

Today, Starbucks began offering a $2 afternoon drink if you bring in a receipt from the morning. I stopped for lunch at Starbucks today and got my stamped receipt to come in later. I never did.

I think we’ve kind of hit the nail on the head, says Brad Stevens, vice president of customer relationship management. It’s easy for baristas to implement and it’s easy for customers to understand.

Easy. Yes, that’s the answer. I want to pay for easy.

IMHO, I think Starbucks has hit the final nail in the coffin. They’re no longer special enough to charge you $5 for a drink, they’re now resorting to discounting the single greatest product they touted. It’s a sad day for Starbucks.

Then Came the Private Coffee House

I’m writing this from my favorite coffee house in the world, The Bean Cup. Tonight, my barista Cassie put together a fantastic raspberry Italian soda for me based on a discussion of my likes and dislikes (that she knows pretty well). And Alayna made me a wonderful heated roast beef sandwich on a toasted bagel (not on the menu).

I wrote this entire post on the free wireless and sat part of the time in a big ol’ comfy swivel chair. Cassy and Alayna are chatting, by name, with the customers and pouring shots (and repouring them if they’re too long or too short), packing them carefully based on the humidity.

There’s such an important story in here for other companies. You simply can’t continue charging for “special” and then whittling away at everything that was special. Starbucks didn’t discount an afternoon coffee this afternoon, they devalued their brand even further.

It’s a sad day for Starbucks, but a great day for The Bean Cup. I never did go back and get that $2 drink this afternoon.

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