Got recession? More importantly, got everyone thinking your company is being damaged by a recession, especially your new lower-income customer groups? If you've got all that and a falling stock, you must be Starbucks Corp. (NASDAQ: SBUX). And you must be in need of a new entry point for the cash-poor masses.Enter the dollar cup of coffee. Long an item found only on the "secret menu" (but for more than a dollar), a short (eight ounce) $1 cup of regular coffee is being tested in the Seattle area, along with free refills on all sizes of brewed coffee. It's a smart move.
In a world where even the old-timers have stopped complaining about overpriced cups of coffee, showing up with a very low-priced entry level for a regular-sized dose of caffeine makes sense. Why not see McDonald's dollar menu, and raise Starbucks' own version? It's certain that the company won't lose money on the product; costs for traditional brewed coffee are the lowest of the bunch, and baristas often throw away large quantities of coffee because it's not fresh enough. Free refills could end up not increasing the company's costs at all, and do great things for customer goodwill. It's a decision I would have made; is Howard Schultz already making waves?
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Reader Comments (Page 1 of 1)
1-23-2008 @ 8:49AM
EMIL J KOVACH JR said...
Wrong again, Some People Pay A LOT For Coffee, To Be In A Place--To Meet People--Who Pay A Lot For Coffee
They WERE Selling the STARBUCKS Expierence.
Now--
They Are Selling The 1.00 Coffee.
Simple
McDonalds Will Sell It--For .99
Pricing Power Is Going Out The Window.
1-23-2008 @ 8:56AM
Josh Smith said...
EMIL, I think you are missing that the free refills will only enrich the "SBUX Experience". Decisions like these create goodwill and for many customers a free refill may mean the difference between staying 10 minutes and staying 45, and well if I am going to stay for almost an hour I should pick up a pastry to go with my coffee and free refill.
A price war, they don't need but programs like this shouldn't detract form the experience. Unless your idea of the experience is paying high prices...
1-23-2008 @ 12:49PM
Paul Phillips said...
The "buck" lowering its price is a lot like the Fed droping the discount rate .75 to save the economy! Unfortunately Buck's problems are like our economy --much deeper. It has lower sales NOT because Mac has entered the scene but because it has LOWERED them all by themselves. THey have overspent, overexpanded, competed with themselves [3 on a corner, i.e. Starbucks here, Alberstons here, Barnes /Nobles etc] and most of all wiped out so many competitors by unscroupulous business and "predetarty" business developement [as set forth herein] that all those friendly mom and pop shops customers became alianated with BUCK after their favorite shop and owner went "by by". Now--- it is true what goes a round comes around -- its comin' around BUCK. and nol .75 cut in the discount rate is going fix that "great experience" you selling.
Paul
1-23-2008 @ 8:09PM
James said...
It wouldn't matter to me if it was 50 cents a cup I wouldn't buy it. I bought a "regular" meaning REAL coffee, not the foo foo lattes with 14 ingredients. It was the WORST coffee I ever tried to drink that was actually fresh. I've gotten stale coffee that had been setting on a burner too long that was better. I personally couldn't care less if they all closed.
1-24-2008 @ 12:21AM
ted said...
imo this is only the start of sbux problems..when your product price gets to far away from the mainstream you leave a lot of room for the competition to come in. big mac....can bk and wendys be far behind...this new comptition will bring price correction to the mkt...as this occurs look for more cuts at sbux...ie employee benefits, consolidation of locations...also, they will have to develop more products in the food area which is not there strong point
1-24-2008 @ 6:56PM
A Klapp said...
Well...I think it's about time the price came down....a GREAT idea.
HOWEVER...I didn't read anything about when the price will come down anywhere besides Seattle. I live in Ohio! What's the "big whoop" about dropping the price in one state?
Come on now....Let's get real...I have two sons that both put themselves through college working at Starbucks...they can WAY afford to GIVE away free-bee cup's o-joe to enhance customer service....so WHY THIS... "Trying it out in one State" garbage?
Signed, I wanna a $1 cup'o Joe and Free refills in Cincy!
1-27-2008 @ 3:21PM
gina said...
I wouldn't pay a quarter for a Strbux cup of coffee...that stuff is the WORST rot gut I have ever tasted. Folgers tastes good compared to Strbux coffee.
1-27-2008 @ 3:23PM
mary said...
$1.00 for a cup of sanka instant...hey, they gotta make money!
1-31-2008 @ 12:48AM
jason said...
$1 cup of coffee is only in Seattle because they get the most feedback from their headquarter state. This idea is in the early stages and will be expanded if successful.
Starbucks WILL NOT cut employee benefits and lose quality. Howard Schultz grew up in the projects and watched his parents suffer before employee benefits were established. Schultz prides himself on taking care of his employees, the day he cuts employee benefits is the day i sell my shares.
Untill then, starbucks will see days above $40 in the next 2 years
1-31-2008 @ 1:30AM
erac3rx said...
All I can say is, anyone with formal education in marketing can tell you instantly that Starbucks selling coffee for $1.00 is a terrible idea. They're struggling right now, but offering this is only going to cheapen the brand. Starbucks management should understand that their coffee isn't very good, that they are selling the image and the experience. Cheapen the image and all you have is bad coffee. If they roll this out nationwide I'm shorting SBUX to make real bucks.