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More signs of trouble at Starbucks: No more decaf in the afternoon, McCafe gains

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Feel like a nice cup of decaf right about now? Don't plan on getting it at Starbucks. Popular blogger (and newspaper doomsayer) Jeff Jarvis is complaining about a new but not well publicized Starbucks policy to stop brewing fresh decaf coffee after the morning rush.

I pointed out in an article earlier this week that Starbucks' (NAS: SBUX) big ads in the New York Times business section were a sure sign of distress. Any company that takes out ads that use lots of verbiage to convince people that their company is still hot and hip (translation: we cost more, but we're really, really worth it) is clearly headed off the cliff.

Now the company, which tried to beat McDonald's at breakfast by offering egg McMuffin clones, has decided to focus on earning money in the morning rush. This should be, for investors, a welcome development, as Starbucks has long refused to cop to the operational realities required for the firm to remain insanely profitable even though the vast majority of coffee sales occur in the morning.

The stores are, however, willing to brew individual cups of decaf later in the day if you can wait a few minutes -- or heat up stale coffee. Yuck.

However, the fact that Starbucks tried to slip this puppy in via the side door alludes to a tin ear when it comes to customer communications -- a serious no-no if you are selling coffee at $4 a cup that can be had elsewhere for half the price. Bottom line -- you can't be all things to all customers and you can't keep a warm-fuzzy image when you are simultaneously saying "No decaf!"

Yes, I'll probably get further flamed for this post. But I'm sticking with my Mickey D's McCafe concoctions -- which, by the way, reported in monthly sales updates that coffee beverages were, with chicken wraps, the fastest growing segment of their sales mix in the U.S. Those buyers have to be coming from somewhere and I think I know where. Piqqem Sentiment for Starbucks is, at present, neutral (call it lukewarm). No hot coffee here, folks.

Alex Salkever is the Director of Research at Piqqem.com, a stock prediction community powered by the "Wisdom of Crowds."

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Last updated: November 26, 2009: 01:25 AM

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