In the annual meeting today, Starbucks chief Howard Schultz vowed to "fight to the death" against Dunkin' Donuts, McDonald's, and other competitors for coffee-and-baked good supremacy. While we've already seen many of the weapons he plans to use in this battle -- better-smelling stores, for instance (without warmed breakfast sandwiches, with fresh-brewed coffee), a reduction in the number of stores too near one another, and a campaign to increase the quality of the baristas -- today marked the introduction of several yet newer and even more desperate ones.Chief among today's weapons is the loyalty card. Starting in about a month, Starbucks Corporation (NASDAQ: SBUX) will introduce a number of discounts for customers who use their Starbucks card to pay, and register it on the web site. (Excuse me while I run to my junk drawer to unearth my card that has $0.16 left on it.) Free "customization" is one perk -- extra syrups and milk substitutions will be gratis. Another perk is free refills on brewed coffee, and the possible expansion of the $1.00 coffee test. Schultz didn't mention whether or not the company would be offering free drinks upon the purchase of 10, or 15; though this is a perk already in place used, and discarded, at licensees in Safeway stores (the data comes from the Safeway Rewards card) and, of course, is working with punch cards at just about every single independent coffee shop in the nation.Along with Schultz' frightening war imagery was the very real specter of the looming recession. Schultz said the economy is in a "tailspin," his consumers, "in a recession." The way we're all responding to the "tough" times, evidently, is by refusing to pony up $3 or $4 for a beverage on such a regular basis -- I, too, have avoided the coffee shop far more frequently these past months.
It hardly seems that a new coffee blend and an automated beverage machine will be the cure-all for your economic woes (maybe all the time you save waiting in line for the barista, you can spend looking for a new job?), but it's certain that changes are still needed. Investors aren't the least bit impressed; they sent the stock down another 74 cents, or 4.06%, to $17.50 today, only a touch off the 52-week low of $16.77.











Reader Comments (Page 1 of 15)
3-20-2008 @ 6:44AM
David said...
I think that the major set back for Starbucks has been the overall reduction in the American economy. Starbucks provided the illusion to its customers that they were something "special." That by purchasing Starbucks coffee they were simply different than the rest of the teeming masses. There is nothing wrong with wanting to feel "special".
However, as our economy has steadily slowed and the price of just about everything has increased, paying a minimum of five dollars or more for what in essence boils down to hot water poured over ground up beans and hot milk, has become a luxury that the "special" masses can no longer afford.
Starbucks should retrench its corporate mentality and go back to selling coffee. The "special" people of this world can look someplace else for a life style. Until corporate Starbucks learns this lesson and refocus on making coffee that is good and affordable, the "non-special" masses with their little "non-special" dollars will continue to go to Dunkin Donuts, where they can buy good coffee and not worry about calling it a small, medium or large when they order.
3-20-2008 @ 6:58AM
jim said...
You can't be all things to all people. Starbucks is NOT Dunkin Donuts.
Maybe Starbucks should buy up all the dying Dairy Queen franchises and turn them into something inbetween the two coffee shop models.
That would give them the convenience of many Dunkin Donut shops, and the cheezey atmosphere of all of them.
3-20-2008 @ 7:05AM
sandy said...
BOB
Starbuscks doesn't care about our soldiers? Then they aren't worth patronizing........Boycott Starbucks!!!!There expensive and a rip-off anyway I can get coffee...at 7-11 with delicious flavors....a large$2.00
Support our Troops!!!
3-20-2008 @ 7:09AM
Dave said...
I use to go to Starbucks every week. I use to go to Dunkin Donuts every week. Now I go to a local coffee shop.
The problem with Starbucks is quality and I'm not talking about the coffee. I'm talking about the people.
I've yet to be in a Starbucks recently that didn't feel like a dressed up Dunkin Donuts. If you close your eyes, you might just accidentally ask for a donut to go with your coffee.
When I pay a premium for coffee, I expect the service or the food to be proportionately better. Neither is true of Starbucks.
3-20-2008 @ 7:11AM
marshmallow said...
If they served good coffee it might help.
I'd take a tim hortons or dunkin donuts coffee over star bucks any day of the week.
starbucks coffee is bitter.
my opinion
3-20-2008 @ 7:13AM
laurie peters said...
Lower your prices and you might not have to fight so hard DUHHHHHHHH !!!!I wont drink it cause its priced to high for a simple cup of coffee can you say RIP OFF
3-20-2008 @ 7:14AM
Larry said...
Who cares about Starbucks? They are the epitome of what is wrong with America - self indulgence. It is unbelievable to me that people line up in the store and now in their cars, to purchase over-priced coffee. And the snobs that have to have multiple ingredients and pay even higher prices deserve to get screwed by Starbucks.
I have not spent a single penny at Starbucks and never will.
3-20-2008 @ 7:21AM
sunnydays said...
I agree with above posts...starbucks has EXCEEDINGLY lagged when it comes to customer service,...not to mention just plain ole good communication. Recently ordered a hot chocolate with whole milk back in December, when I was 8 months pregnant...when I got it and tasted it, knew instantly it was not whole milk...when I told them, they looked at me like I was an idiot and said I didn't order whole milk. When I told them I indeed did, the guy who took my order just stared blankly at me. Of course they remade it, even though I was now barely running late to work.... ran to my car with my new drink, trying not to be late, and trying not to tip over, as I was...I remind you, 8 months pregnant... so WHY when I sipped my drink as I was pulling out of the lot, did I taste a MOCHA!!!! Yup. The guy gave me a mocha instead of a hot chocolate. Even more caffeine. Nice. So when I called to tell the manager, she proceeded to place the blame on me b/c I did not 'make the guy repeat my order back to me'...and said I should always make them repeat the order. OK. I thought that was part of their job! Guess I was mistaken...guess I not only have to clearly communicate what I want, but now I also have to supervise their job for them. Just one of MANY annoying starbucks encounters! (BTW, all the manager offered was to remake the drink that I paid for but never got...no complimentary drink or anything.)
3-20-2008 @ 7:23AM
Guateque said...
I totally agree with Bob. Really? All what the soldiers wanted was a little taste from the Homeland, and Starbucks couldn't grant that wish. Well, I guess Howard Shultz is going to "fight to the death" on his own, because he doesn't support the war, or anyone participating in it. Here is a little message for Howie: "Life ain't easy, when you fat a greedy. Ain't that right Howie?!?!?!"
God bless our Troops!
3-20-2008 @ 7:26AM
David Fekete said...
For me its priorities. I save a few bucks a day making my own coffee, limit eating out to only once or twice a week, and pretty soon you have enough money for higher ticket items. I just paid cash for a new 4 wheeler just from cutting back on waistful spending. Do the math. Two or three expensive cups of coffee a day....12-15 bucks ??
3-20-2008 @ 7:29AM
Shelley said...
Just so everyone knows, and not that I'm a big fan of Starbucks myself, I think they are a bit over-priced to say the least. But don't start bashing companies when you have no idea what you are talking about. A rumor is a rumor, do you believe everything you read without doing research on it, I mean really people! This link will tell you the truth, that Starbucks and many of its employees support our troops. Not only this website but many other information portals will let you know this.
http://www.truthorfiction.com/rumors/s/starbucks-iraq.htm
3-20-2008 @ 7:40AM
Margaret Callinan said...
Hi, 3 - 4 bucks for a single cup of coffee, times about 20 days/mo equals $60-$80 for coffee?? Noooo way. I searched for a great coffee grinder, and a great coffee maker..bought a great mug..and, now my coffee is maybe $15-$20 for entire month ..w/a refill. Of course, I dont permit myself to drink more than that per day - because of the health issue. I mean I dont want to have located all this, perform the morning ritual, and find I over indulged and have a health issue...so, I try to be smart about that as I was about persuing a far less expensive way of enjoying my morning coffees. Next, thing on my agenda ...is to become a better cook too. Then, see how I can cut the cost of gas for the vehicle....maybe I could take public transportation often....hmmm. These days are making an enterpenuer outta me too...Im workin on some great sachets these days....smilin'. (hope I typed clearly!)
3-20-2008 @ 7:50AM
Tom said...
How many stores? How many quailified managers and assistant managers?? How many qualified trainers, openers and closers? How many baristas that care? You want quality and consistency???You do the math as you drive to your office or place of employment knowing how hard it is to get even one or two good employees nowadays....It's coffee people!!!!!!! Overpriced at that!!
3-20-2008 @ 7:52AM
pcteky said...
Although I don't drink coffee at Starbucks, or anywhere else for that matter, I do have to reply to Bob and his anti-Starbucks/pro-military comments. I support our military in what they are doing, however Bob is perpetuating a false story about Starbucks and should really check his facts before yapping his lips!
http://www.snopes.com/politics/military/starbucks.asp
3-20-2008 @ 8:00AM
jim said...
Just pour some mud in my cup and let me out of here.
3-20-2008 @ 8:00AM
pclifton30739 said...
I must be a snob because I will take a Starbucks coffee over the SLUDGE they call coffee at McDonalds and Dunkin Donuts anyday. Now if they brought Caribou Coffee into southern Florida, they may have some competition.
3-20-2008 @ 8:06AM
DD said...
Since they 'retrained' their barista's...I got 2 great latte's...and several bad ones. The level of consistency is not there and after expressing my concern with a manager who simply did not care to hear what I had to say...I stopped going.
3-20-2008 @ 8:08AM
cherrylharris said...
Starbucks has so declined in customer service that I think of it as the McDonald's of coffee shops. It used to be where my daughters and I would spend an hour or so - she with her toys and hot cocoa and me with my newspaper and "Medium" Decaf Caramel Machiotti - and really feel indulged and treated. Now you're lucky if you get a smile, let alone have someone acknowledge you and speak to you instead of the other Starbucks employees and the quality and attention to detail is about 20%. I get my "Coffee On" at work with one of those auto machines and forget about paying someone way too much for way too little. Oh, and tips? If McDonald's and Wendys and Burger King don't have one .. thinking of the line mentality .. why should we tip robots at Starbucks?
3-20-2008 @ 8:09AM
solomeeeo said...
I LOVE my Starbucks!!!!!
3-20-2008 @ 8:09AM
el said...
WHY do some people think Lot$abuck$ is so great? We had it 1 time & it tasted like burned coffee grounds. YUK! They're way to Xpensive & I hope they close a bunch of them as they, like Krispy Kreme, oversaturated the market, added other items, have snobby employees & act like they are THE status...well, we'll stick with Dunkin Donuts java & our OWN brews. If others want to $pend $5 for a mochahoohawhatever: power to 'em.