Howard Schultz returns as Starbucks CEO, will close underperforming stores
As you sip your vanilla nonfat latte this morning, here's something to think about.
Remember that memo from former Starbucks chairman Howard Schultz (pictured above) to former company CEO Jim Donald? If not, that's okay. Schultz wrote that since there were so many stores, it watered down the brand, and he warned of the "commoditization of the Starbucks experience."
Well, he's back, perhaps in response to McDonalds' introduction of high-end coffee drinks on its menu.
His immediate goals include slowing company growth and closing underperforming stores in the U.S. while expanding its base abroad. He also wants to reignite people's connection with Starbucks by introducing new initiatives (and new drinks).
What do you think?
Well, he's back, perhaps in response to McDonalds' introduction of high-end coffee drinks on its menu.
His immediate goals include slowing company growth and closing underperforming stores in the U.S. while expanding its base abroad. He also wants to reignite people's connection with Starbucks by introducing new initiatives (and new drinks).
What do you think?
Comments
It's about time, perhaps there will only be 2 Starbucks per block instead of three.
Posted by: Kat | January 8, 2008 10:18 AM
I've often observed that the dilution of the Starbucks brand happens less in its own stores and more in places that utilize the Starbucks name. Case in point: last week, I stayed in a hotel that had a "Starbucks" outlet in the lobby. Starbucks coffee, labels all over the place, branded cups and cupwraps. And it served cold coffee from the thermos and lousy lattes. Of course, it wasn't a real Starbucks, but many people wouldn't look beyond the logos to realize that.
Posted by: Michael Stoner | January 8, 2008 10:39 AM
Kat, Michael - Completely agree. Starbucks is absolutely everywhere.
Managing editor Allison Enright and I were talking about Starbucks similar this morning: Remember all of the news about how people would stop buying $4 lattes? How about $2 packs of gum? Do you think Wrigley could have overestimated the market for premium gum?
Posted by: Daniel | January 8, 2008 10:56 AM
I have had the chance to listen to the President of Starbucks International speak on a couple of occasions and felt that its international growth was justified, however I felt that their US growth strategy was far too aggressive.
I also agree with Michael in regards to their licensed stores not maintaining the same quality as their actual outlets. It will be interesting to see how they face new challenges from McDonald's.
As a side note, I also read where the McDonald's franchise owners are not really excited about the costs involved in adding the McCafe.
Posted by: Chris | January 9, 2008 1:23 PM
The CEO did the right thing by cutting down its non-profitable stores, but he could have also increased its demand by bringing a change in its presentation, I mean to say the advertisement. That could have attracted the customers in many ways.
Posted by: AKSHAY KUMAR LAL | January 16, 2008 1:50 AM
I think the CEO did the right thing in cutting down the non-profitable stores. Then again, that is a good move for any large or not so large firm on a finance purpose.
In our area Starbucks has a great deal of competition from not only McCafe (which hasn't been put into the McDonald's franchise yet) but Tim Horton's which is all over...and now we have Dunkin Donuts going in locally.
Posted by: Trinton | January 28, 2008 7:46 PM
Chris - I haven't read too about the McCafe. How much do McDonalds franchise owners have to pay to get a McCafe?
Akshay - Agreed. Cutting out underperforming stores is a good all-around business decision. But how would you change the Starbucks image?
Trinton - Just checked out your Web site and recognized the 716 area code. I did my undergrad studies at the University of Buffalo. I used to live at Tim Horton's!
Where are McCafe's popping up? Downtown? In the 'burbs? Are they stealing a significant amount of business from Timmie's?
Posted by: Daniel | January 29, 2008 10:20 AM
In the Seattle area, the employees I've spoken with are thrilled about Schultz's return. In addition to his stopping some of the planned outsourcing (call centers being among them), he's come back with a message of getting Starbucks back to doing what they know how to do: make coffee.
The Starbucks deli counters that have been popping up are (thankfully) among the first to go. The sandwiches were soggy and overall underwhelming, while taking up a bunch of counter space and looking like a 7-11. It looks like Schultz is trimming the fat everywhere and I'm happy to see it.
Posted by: Tucker | February 4, 2008 5:59 PM