In a bid to make quick-service restaurant writers blare the "predictable" alarm, Starbucks Corp. (NASDAQ: SBUX) has again moved into McDonald's (NYSE: MCD) territory with what Howard Schulz calls "breakfast pairings at attractive prices." I'm pretty sure that when I turn to our desk reference guide of corporate sayings, that is the definition for "value menu."
Perhaps they don't invite me to press briefings any more, because they knew that when Howard said this in a talk to investors last week, I would have shouted something about "differentiation" and "McDonald's" and "not." Starbucks is apparently revealing more details about its value menu this week, when we will learn if the meal deals -- I mean, "breakfast pairings" -- are about the same price as a McDonald's McCafe coffee drink matched up with, say, a sausage McMuffin or something.
This couldn't be a more obvious ploy to attract customers who have been wooed away from Starbucks by McDonald's lower prices and less pretension, not to mention what one customer called the "richer-tasting" drinks. Which is, I believe, a euphemism for "more like a milkshake and less like a cup of coffee." While it's admirable to target customers with better prices in this economy, the clear struggle for McDonald's customers has me scratching my head. Were these really ever the appropriate customer base for Starbucks in the first place? I believe this is what had Starbucks pointed in the wrong direction for the past few years: the endless and meaningless struggle to be all beverages and foods to all people.
There's a reason it's called a "niche," and in my Venn diagram of the breakfast market, there is very little overlap between Starbucks' and McDonalds' customers.
Yes: I think Starbucks would do well to adjust pricing and encourage customers to eat food and drink coffee at its restaurants. Raising the average customer's per-visit spending is a wonderful plan. But I worry that we will soon see even more menu items that appeal to a fast food clientele; further alienating the traditional Starbucks customer who welcomes the opportunity to eat oatmeal, or a really lovely cupcake, or a scone with her morning coffee, without having to smell the trans fats dripping off her neighbor's sausage muffin. I'll withhold judgment until the menu is revealed, but in the meantime, call me an unsurprised skeptic.
Investors were cautiously optimistic at the news, and as of 12:35 p.m. the stock was up 15 cents, or 1.59%; although with the stock's moving average hovering near its five-year low, a price of $9.59 is hardly worth heralding.
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Reader Comments (Page 1 of 1)
2-03-2009 @ 2:52PM
evomatic said...
Well researched article....there are no trans fats in the sausage breakfast sandwich...but yes, the smell of those delicious things does kill the coffee aroma that made Starbucks a different and enjoyable place to hang out.
http://www.thedailyplate.com/nutrition-calories/food/starbucks/sausage-breakfast-sandwich
2-03-2009 @ 3:07PM
John Medcalf said...
Starbucks was coffee.
Then they started serving breakfasts that stank (literally). Funny how nuking transfats in 500 sq ft fills the space with aromas. I UPSed one to their marketing department but I don't think they are genetically programmed to take advice.
Now they don't brew anything except their flagship Pikes Place except on request. Thank goodness I can shame them into comping the delayed brew most of the time. (I know I'm not helping Howard as much as I would like but I keep trying to teach him something.)
It's hard to stand around Starbucks for 5 minutes reading all their pats on the back from experiences we would all die for to the moral superiority of 5 cents of every $1.80 for Ethos helping someone without a neighborhood Starbucks.
2-04-2009 @ 1:02AM
Greg Sherwin said...
Since when did coffee need a "menu", let alone a "value" one?