Can Howie Get His Groove Back?
Posted by deCadmus on Jul 08 2008 | Category: Coffee
If you’re a Wall Street analyst, you might note that year over year, Starbucks’ valuation has slipped about 40%. If you’re one of several thousand Starbucks employees you may soon find a pink slip in your pay envelope, as the company moves to close 600 stores, eliminating some 12,000 jobs. 
If you’re an independent coffee house owner, you may be sitting there with your jaw hanging slack, just trying to wrap your head around the idea that, when Starbucks closes 600 frickin’ coffee shops, the move shrinks its overall footprint by a mere 8 points. And maybe if you’re a Starbucks customer you’re just so over that whole Starbucks thing. Sure, Starbucks was the epitome of hip for a while, but then they became, well… McDonalds:
Twenty years ago, it was love at first sip. Like every prisoner of love, I went from downing one cup a day to three or more. How, I wondered, had I gone more than 40 years without a midafternoon break or even a “for no reason” indulgence?
Today those memories are like bitter, stale grounds. These days the breaks aren’t fewer but are often enjoyed somewhere else. That early Starbucks mojo is no more. My disillusionment set in about three years ago, but the company’s ballyhooed “Starbucks experience” died even earlier, killed by a growing bureaucratic culture.
Ouch.
Maybe it *is* about the bureaucracy. There is, of course, a very real danger when you grow to the scale of Starbucks — or McDonalds — and your stores light up every other street corner, shopping mall and airport concourse. At some ill-defined point on your meteoric growth chart you may cease to become the sum of whatever got you there — whether that was a curiously strong cup of brewed coffee, a made-to-order espresso milkshake or a Happy Meal — and instead morph into a massive real estate holding company that also brews coffee by the gallon pot.
Or maybe it’s something else. What with mortgage meltdowns and gas prices at four bucks and change, a spiraling economy has customers feeling the pinch, caught between guzzling a latte or putting another gallon of fuel in the family hauler. Call it — as financial self-help author David Bach has — the latte factor:
The Latte Factor® is based on the simple idea that all you need to do to finish rich is to look at the small things you spend your money on every day and see whether you could redirect that spending to yourself. Putting aside as little as a few dollars a day for your future rather than spending it on little purchases such as lattes, fancy coffees, bottled water, fast food, cigarettes, magazines and so on, can really make a difference between accumulating wealth and living paycheck to paycheck.
Oh sure… financial gurus have been offering like-minded advice for decades… but those were years that lacked the incentive of four dollar gasoline and upside-down mortgages, too. Maybe folks are actually heeding the collective wisdom of the financial set. Maybe they don’t have a choice.
More likely what’s got Starbucks on the rocks is a bit — or a lot — of both factors. Which isn’t to say that Howard won’t be able to right the good ship Starbucks… but I’d wager the course corrections are far from over.
And while Starbucks is thrashing, other shops –small chains and indies alike — may be able to carve out some new opportunities for themselves, provided they’re able to keep their focus on the fundamentals: making great coffee and satisfied customers, one cup at a time.
