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Tuesday, November 11, 2008

What's happening to the Starbucks brand?

When times are tough, people hold on to those small vices that make them feel like things are still okay. Yet Starbuck's Q4 profits plummeted. Though restructuring charges and other costs associated with their turnaround plan are built into the numbers, this result causes one to consider what's really going on.

Are people trading off for Dunkin? Are they going through the McD's drive through on their way to work (and enjoying a much better McD's cup of coffee)? Has WaWa, or even the local deli, become a much more attractive and far less costly stop. Ultimately, the answer is yes. Because Starbuck's position as a "third-place" has lost some traction.

So what's happened? Seems that a third-place given these troubling times would be just what people are yearning for. A place of refuge - to get away from the maddening world. And a whole lot less expensive than cozying up to the bar. But now it's only come down to the coffee. What's led to the watering down of the Starbuck's experience?

Some question whether the Starbucks brand has lost its soul, its special place as a local neighborhood-feeling destination. I think the answer is yes. And I think the solution is going back to what made it so different and special in the first place – a warm and inviting experiential brand that just happens to serve coffee.


  1. I know people who have sworn off buying coffee from any establishments. They started buying bags of beans and brewing in home/office.

    Though I don't think this is the only reason for the drop. More likely a myriad of factors such as financial belt-tightening, a Starbucks backlash and Dunkin's endless advertising have snuck up to bite them in the beans.

  2. I have never been a fan of Starbucks coffee, it always tastes burnt to me. But when it was located in the lobby of an office building I worked in, I was there everyday at some point, I'm not sure why. Convenience? Peer pressure? I spent a fortune on Frappacinos and gained 15 pounds.

    It's about time it was about the coffee and the coffee alone, and I'm a little surprised it took this sort of economic plunge to get people to take a step away from Starbucks. When you see a children's movie and there's a joke about a Starbucks on every corner (Shrek 2) It's safe to assume they are over exposed. The well was bound to run dry.

    But as history has shown us, some of life’s little indulgences enjoy a sourge in sales during a time of economic strife. Lipstick, for example. More than just the difference between a hockey mom and a pit bull, it is recession-proof. Lipstick sales are up right now, even while the almighty Starbucks is suffering a loss. So I guess there will be more lipstick, just less lipstick prints on Starbucks coffee cups.