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Starbucks is running an increasing number of promotions and deals. It’s all part of a bid to win back customers after a period of weaker results and softer traffic to stores. At first glance, it’s a logical move. We know that consumers have become more value conscious and that many are constrained. And there are certainly some Starbucks’ customers who have cut back on their coffee fix to save money. But it’s really important to analyze what has been making people spend less at Starbucks and/or visit the chain less. Price certainly has something to do with this. However, there are a whole basket of other factors including quality of the experience, the wait times for drinks, cafes becoming less welcoming, and so forth. More promotions, especially via meal deals which not everyone is interested in, do not remedy all of the underlying issues. From a rough look at our data, they probably address something like 25% of the problem with a solution that doesn’t even address the cost concerns head on, let alone all of the other issues. More of my comments in the Daily Mail article linked in the comments. #foodservice #retail #retailnews #coffee #prices #inflation

$7 Bucks Starbucks Why Starbucks is losing customers Starbucks is finding growth harder to come by. Last year, Starbucks controlled 26.5% of the U.S. coffee and snack shop market, according to research firm IBISWorld. However, the coffee giant has seen global same-store sales decline over the past two quarters. “When you’re the market leader, everyone else comes for you and they try to nibble away at your market share. And there is a lot more competition than there used to be,” said Neil Saunders, managing director of GlobalData Retail. Starbucks cafes have long been a “third place” for customers to work and socialize outside of their home or office. But experts say the company is now less experiential than it used to be. This has led to increased competition, with value players like McDonald’s and quick-service restaurants vying for a more price-conscious customer. “What matters right now is obvious value. The consumer is more ‘choiceful,’” said Kevin McCarthy, a managing director at Neuberger Berman. Watch the video to learn more about how Starbucks is trying to address its recent challenges.

Starbucks - Complexity vs Value Add complexity: I read a wsj article that said there were literally 170,000 drink combinations in the menu and options. That combined with more at home workers buying to go and price escalation, Starbucks has work to do. Consumers want an experience for sure but they also want value, service speed, innovation, and quality. Who has ideas on how to solve the Starbucks issues?

https://lnkd.in/gq5NTrxQ I won't beat the drum that $5 coffees every day is literally hundreds of thousands in retirement. But everytime I pass a Starbucks drive-thru, the line is 6-7 cars deep. Hard to argue with its popularity but I see a product whose price can be driven really low by automation. Reduce the overhead by increasing automation and decreasing store footprint and I think you have a recipe for success. However, coffee is relatively price-inelastic. Customers are literally addicted to the product. So Starbucks commands a premium by charging a premium price. It's a fascinating study in economics.

As always there’s a tendency for organizations (or rather the clowns who run them) to reach for the discount lever rather than fix the basic structural problems which have gotten them into trouble in the first place…ironically as demand then temporarily spikes but without the necessary structural and associated changes having been implemented the situation actually worsens as more pressure is placed on an already depleted, under resourced and (usually) wholly demoralized sales force…and on it goes. I sometimes baulk at the sheer stupidity that seems to abound at executive level …but then most of them probs don’t spend much time in a Starbucks nor have they ever actually worked in one. I’ve not used Starbucks myself all that much but I do recall back in the day their huge mugs…whatever your opinion of the coffee at least you got a decent volume of it. Nowadays, what used to constitute a medium latte (my particular poison and i’m being generous) ) would be a large one…but at nearly twice the price. Of course SB are not unique in that …the other week in a trendy little hole in the wall I shelled out nearly £4 for a luke warm regular cup of fairly average coffee in a VERY small cup (I almost queried if it was a mistake ) …it disappeared in about four moderate gulps. While the hospitality industry has suffered greatly this past few years and continues to face many challenges at times I get the impression that the concept of value for money has left the building…and that there is an increasing tendency in some quarters to take the paying customers for…err…mugs.

What’s wrong with Starbucks? Here’s what Howard Schultz says… “Everyone shows up, and all of a sudden we’ve got a mosh pit, and that’s not Starbucks,” Schultz said. He said that while app ordering is more efficient, the company should have done a better job anticipating the technological refinements needed to preserve the cafe environment. Read the WSJ article (sub required): https://lnkd.in/eCFJqiRD Of course, we have our own take on how Starbucks can fix this issue, too. While individual cafes that once averaged 1,200 orders a day are now grappling with up to 1,500 daily orders, some cafes have seen seating removed to accommodate larger to-go queues, and the company is planning more stores specifically designed for drive-throughs or pickup orders. But as Starbucks evolves to meet changing consumer habits, how can it maintain the warmth and connection that originally defined the brand? This is where Curbit can help, offering innovative solutions to help Starbucks strike the perfect balance between digital efficiency and cafe ambiance. Read more about how Curbit can control the flow of digital orders streaming into Starbucks or any restaurant chain that offers digital channel ordering. 🐸 https://lnkd.in/e9C8zZ_C #capacitymanagement #controltheflow #onlineordering #starbucks #ordermanagement #happyhandoffs

Starbucks isn’t like Chipotle Mexican Grill nor more than Walmart is like Target Similar Retail species but survive differently in the consumer market. And they have different operating strengths and weaknesses. But there are retail predators ready to take back share from Starbucks. Starbucks App isn’t the problem; it's their business model. The majority of their business is Drinks, which are very high volume and cost less than a meal at Chipotle. So they are overwhelmed. A simple answer would be to add more staff and equipment or upgrade the App technology. That is like adding another highway lane; it will work until it doesn’t because of increased traffic. They have a longer-term problem that will require continued innovation. Starbucks has an operational bottleneck due to growth and a high-demand product, mostly coffee. But this bottleneck is, as I said in yesterday’s post, their Achilles heel, which is also mentioned in this article as a metaphor. When your store's production facilities are maxed, delivery times become a problem. Add more stores nearby, and you split volumes and increase costs. Add more automation, and you kill the artisan experience. They have to simplify their coffee-making further without losing what made them successful. I’ve read some calling for ghost kitchens. This will not help Starbucks; they need to fix this from within and bring back their in-store retail coffee culture. Starbucks is not Chipotle, but they did cut in on Tim Hortons and McDonald's breakfast and coffee business. They are competitors who will do all they can to take advantage of Starbucks' weaknesses. #retailing #strategy #ceo #technology #innovation #CoffeeStrategy

Business fentanyl are insane profits that take you away from what built your brand. For Starbucks it is in-app ordering. They get billions of cash in advance because you prepay. It also increases the number of customers a store can serve. Starbucks also moved away from coffee to sugary drinks, which increased their average order value. But Starbucks is no longer a coffee store, nor a 3rd place. It is high end Dunkin Donuts. Very profitable not very resilient.

How much can you save on efficiency? ☕️ Starbucks has $40B in annual sales from 37k+ stores. Bloomberg reports that saving a few seconds per order could earn an extra $900m annually. So Starbucks is investing $450m in a new "Siren System" to optimize the bar setup. Currently a Mocha Frappuccino takes: 16 steps and 87 seconds. With the new Siren System it would take: 14 steps and 36 seconds. There are 383 billion Starbucks drink combinations. They could cut down on the possible combinations, but they would lose $1B yearly if they took out all the extra options (who new syrup was so lucrative?) Instead, they're optimizing to cut down the 5-minute average wait time The Siren System will be rolling out to 40% of U.S. stores by 2026. I wonder how much research went into this system 😅 #startbucks #coffee #optimization

Starbucks is in trouble. Sales are down and a new CEO has been brought in to turn things around. In his first week, Brian Niccol admitted Starbucks had "drifted from our core". But what does he need to do to get it back on track? ☕ There's a clear issue with in-store experience. Comfy sofas have been replaced with hard wooden stools while the focus has shifted to delivery and digital ordering. Better for turnover, but is it for customers? 🥤 It may be the biggest coffee brand in the world, but Starbucks is being challenged from all angles. Failure to innovate could see it lose customers to premium brands like Gail's or QSR venues offering faster service. ⭐ There's no doubt the Starbucks brand has power (how many other coffee chains sell so much merchandise) but it needs to create excitement again. Thanks to Jeffrey Young from World Coffee Portal and James Hacon of Think Hospitality Consulting for your thoughts on this.