Joshua Pozner’s Post

This great article on Starbucks describes a problem that from now on I’m going to call “the 383 billion latte problem”. That’s how many different varieties of latte we can now purchase, due to endless choice in coffee, milk, flavored syrup, and other bells and whistles. “Narasimhan, who sometimes works shifts at stores to better understand the operation, faces the more fundamental question of what Starbucks even is. The company long highlighted its version of Italian espresso culture, a place where people could linger, read the paper and chitchat with baristas. But now, 74% of orders are drive-thru, mobile or delivery, and cold drinks account for three-quarters of its business. The chain even has pickup-only stores with no seating. “We fully acknowledge a need to evolve and modernize,” Narasimhan told investors in May.” Right here, we see the tension between customer service and worker rights, and get the sense that Starbucks is sleepwalking into failure. All fascinating when juxtaposed against its lofty sustainability goals. But it also highlights a recurring issue in the modern world, which I think is a fundamental misunderstanding of what the customer “wants.” So many latte varieties, still so hard to get a simple, great cup of coffee So many varieties of kitchen utensil, but still difficult/impossible to buy a decent pepper mill So much innovation in tech, still no printers without glitches So many things that are supposed to make life easier, yet I’m stuck in an endless loop of two stage password verification and 500 milk varieties. We cant get the basics right while searching endlessly for the next big thing. Make it stop!

Coffee lovers (and that's most of us), this one is for you. While I'd rather drink no coffee than anything from Starbucks, their sheer scale and success as a business is one I admire, and this story has truly astounded me. Convention dictates that a latte should be a 1:3 ratio of espresso to hot milk. For Starbucks, however, this just one of 383 billion different ways that a latte can be made, between their different sizes, temperatures, milks, foams, syrups, drizzles, toppings, powders and, I assume, barista enthusiasm. It leads me to ask two questions: - Is it even still a latte? - Why are they not limiting the amount of options to improve the business? The answer to the first is obviously not, and you'll never be able to convince me otherwise. For the second, it seems to be a fine line. This personalisation adds $1 billion to revenue each year (there's gold in that pumpkin spice), but it does so at the expense of serving customers quicker, and serving 5 extra customers a day across all of their locations could add another $900 million. So they're focusing on other parts of the process to find time for those extra 5 customers. https://lnkd.in/gFZCGbPY #starbucks #personalisation #coffee

Yesterday, I met with two friends, Andra Ghibutiu and Andrei Dunuta, at Starbucks to talk about a forthcoming educational project (hush.. it's a secret 😀). With the coffee queue stretching out, we just settled in and began talking. I'd glance over at the line from now and then, thinking of ordering. The queue stayed long and our talk was too good to interrupt, so I ended up ordering.. nothing😀. For #Marketing students, this is a prime case study on optimization, and it's detailed brilliantly in this article from #Bloomberg. Key metrics for this optimization: It takes more than 5 minutes for 1/3 of the customers to place an order. This metrics directly translates into 1) some potential loss in revenues: >>> With 37,200 Starbucks locations worldwide, "serving just five extra customers a day in every store could boost annual revenue by more than $900 million." 2) customer satisfaction >>> Customer surveys highlight the queue as the primary issue. The extreme level of product personalization is turning into the biggest hurdle. Let's look at the number of combinations for what used to be a simple #Latte: - 3 possible sizes of the cup - type of coffee (signature expresso, blonde expresso, decaf, 1/2 decaf.." - extra shot - type of milk - type of sweet: Sugar, stevia, honey etc - type of extra syrup - type of extra sauce (caramel, white chocolate..) - type of extra milk foam - type of extra cream - type of extra drizzle - type of topping (caramel crunch, cinnamon dolce..) - type of powder.. - ... Guess how many combinations exist? >>> 383,201,280,000 !!!!! Getting all these ingredients at hand - ready-to-use - is a real challenge. And it has a direct impact of the barista retention. "The intricacies are good business, because Starbucks charges extra for additions, which bring in more than $1 billion in revenue a year. But they slow things down." We all understand now that it is a complex problem, and a delicate #ChangeManagement to operate with the staff. "Starbucks says employee feedback on the upgrades has been “overwhelmingly positive.”" Many might not be aware, but the business of Starbucks has changed recently. Starbucks sticks to the image of a cozy place to enjoy a hot coffee. But the data tell a different story: - "74% of orders are drive-thru, mobile or delivery" (Big up to my friends of bonapp.eco for their successful partnership with Starbucks in Romania) - "cold drinks account for three-quarters of its business." ---- From cozy coffee corners to complex concoctions, Starbucks brews a tale of change and challenges. The next time you sip, remember the story behind every cup. ☕️ (this catchphrase is from #ChatGPT, not me :-D )

Starbucks is Spending Billions to Shave Seconds from the Coffee Making Process - Bloomberg Starbucks would make an extra ~$900m a year if each store served 5 extra patrons per day. There are currently 383 billion potential drink combinations at Starbucks. And orders have gotten so ridiculously elaborate, that the average wait time is 5 minutes. Starbucks new Siren System will save valuable time and be in 40% of US stores by 2026. Key Take-A-Ways: 1. Customers love personalization @ speed 2. It takes ongoing investments in innovation to perpetually elevate the customer experience with the right set of technology and process improvements https://lnkd.in/eastFQuD

Although Starbucks has been focusing on introducing more deals, price isn't the major problem causing dissatisfaction at its outlets. Wait times, which have gone up sharply, are currently the biggest issue - including for staff. As such, it is interesting that the coffee giant is changing the way it makes drinks orders via new processes that it calls its Siren Craft System. These aim to make baristas’ jobs easier and speed up service times for customers. The new processes were developed with worker feedback on which issues stopped them from creating beverages and connecting with customers. Starbucks said it plans to add a role akin to an expediter in a restaurant production line, someone who steps away from production and helps solve logjams in cafes, handling tasks such as restocking cups or helping when an unexpected crowd arrives. It will also change the order in which beverages are made. Previously, cold drinks were prioritized from start to finish, even if a hot beverage order came in first, as pulling espresso shots was the last step. Baristas will be given more control over the company’s digital production manager, an iPad system that controls the sequencing of orders in various channels from cafes, mobile orders and the drive-thru. Hopefully the new measures will go some way to alleviating the issues faced by customers and baristas. Especially so as they're based on feedback from those at the sharp end. #retail #retailnews #foodservice #coffee #processes #management

What we can learn from the Starbucks Puppuccino 🐶 ☕ When we go to a coffee shop, the goods and services we receive can largely be categorised into two groups: Expected and Unexpected. In the Expected: good coffee made from freshly ground beans, ambiance, hospitality, comfort, choice, rewards for loyalty. Since the coffee space is a crowded and competitive market, we demand these things as standard. In the Unexpected: Special promotions, partnerships and added value items, the stuff we can't get at home. For instance, the Puppuccino. An espresso cup full of whipped cream. Cost to Starbucks, minimal, almost non-existent. Benefit to consumer: Huge. Now every time I pass a Starbucks with my dog it becomes an event. A reason to go. It's symbolic of the flexibility of this third space, where anyone is welcome - even those with a waggy tail. And of course, if I'm going in for a free 'Pup Cup', I'm going to buy coffee while I'm there. This reinforces spending habits, positive association with the brand, and offers a surprise and delight moment. So next time you're working on a brief, perhaps ask yourself - what are the Expected and Unexpected benefits I can bring to life. And why is the second category so much more powerful than the first...?

How Starbucks makes you pay more for coffee. There are many great coffee brands out there. But Starbucks is really rich, worth over $100 billion. So, how do they get you to spend more money on coffee and keep coming back? First, they use fancy Italian names to make their stuff seem special. Italy is famous for its food. Everywhere you go in Italy, you can get yummy pasta made with fresh ingredients. From "baristas" to the sizes of their drinks... "venti" and "grande". Starbucks is trying to make you think their coffee is super fancy. Second, Starbucks tries to be friendly with each customer. When you order coffee, they ask for your name. And when your coffee is ready, they say your name. This makes you feel closer to them. Third, Starbucks doesn’t just sell coffee, they sell an experience. You can make your coffee just the way you like it. Their stores have wifi so you can stay, work, or even have meetings. And they have cool new places like the Starbucks Reserve Roastery, the Reserve Bar, and the Reserve Store. It’s like a fun place for people who love coffee. And if you don’t like Starbucks, you can go to smaller coffee shops instead... like Seattle’s Best. Oh, but that used to be owned by Starbucks too. ;) Whether you love or hate Starbucks, you can always learn from their marketing.

The craziest part of this Bloomberg article isn't even the average wait time for a Starbucks drink; it's the fact they have such "a sprawling menu and increasingly customized drinks with various squirts, shots and cold foams—which add up to more than 383 billion different possibilities just for a latte." 383,000,000,000 different latte combinations?! It's no wonder their employees are frustrated, and the company is spending billions of dollars on developing ways to cut wait times without significantly impacting customer options. However, reducing their menu size might be the best option because in my experience it's almost impossible to be an expert in something when you are offering that many choices.    This is a common problem faced by businesses across industries and sectors. Trying to be everything to everyone will quickly lead to being stretched too thin and your value becoming watered down. In my experience, the best wealth advisors are masters of their time and craft. They don't claim to do it all and they don't try to resonate with everyone. They focus and specialize to become the expert their clients need.  That's how you provide real value over the long term. That's how we do it at Monument Wealth Management. #wealthmanagement #portfoliomanagement #businessvalue

HOW A CHANGING STARBUCKS HOPES TO RETAIN CUSTOMERS Starbucks is having a tough time. Though it’s still the world’s largest coffee chain, global sales decreased 3% last quarter, and in North America, total transactions at stores open at least one year dropped 6%. CNN attributed the dip to higher prices and consumers’ unwillingness to pay them, pointing out that McDonald’s and similar chains have also reported falling sales. SO WHAT CAN STARBUCKS DO? Today’s Starbucks customers don’t order hot coffee and chill with a book; they order cold drinks via drive-thru or mobile, more akin to a fast-food restaurant than a cafe. Starbucks’ new strategies include: A new “Pairings Menu” with $5-$6 drink and breakfast combos. This is in line with McDonald’s, Taco Bell, Wendy’s, and Burger King — all attempting to lure back customers with $5 value meals. The Siren Craft System: several operational changes that act as an expansion of the “Siren System” — tech updates Starbucks began making in 2022. HOW DOES THE SYSTEM WORK? Baristas now prepare hot drinks, which are perhaps less popular but faster and simpler to make, first, per Business Insider. This means no melty Fraps while waiting on your friend’s hot latte. They also steam milk before pulling espresso, saving time and allowing the espresso to stay hot. Also: A digital dashboard predicts busy times so that supervisors can strategize. “Peak Play Callers” are new roles with more flexibility to move between stations that need help. Ingredient dispensers are lined up on the counter so that employees don’t have to reach below the counter. Starbucks even has new, faster blenders. Everything is about shaving off seconds, often in ways simpler than you’d think in a world increasingly powered by algorithms and burger-flipping robots. Ultimately, the idea is that if people pop in for a quick latte — preferably made by baristas who don’t seem overly stressed — they’ll consider it a worthwhile treat, versus a hassle and an expenditure they don’t need.

#personalization #experience Did you know that Starbucks use 4 major manipulation techniques to sell you their overpriced coffee? :D   First, Starbucks capitalises on customers first names to foster a sense of camaraderie. Secondly, they use Italian sounding names to create the perception of high-quality coffee. Next is with price, the coffees strategically set to convey affordable, quality and sets high enough to convey a sense of value, but not excessively so that they become unaffordable. Lastly, Starbucks takes advantage of the IKEA effect by allowing customers to customise their drinks, making them willing to pay even higher prices.   The secret of Starbucks lies in selling experience rather than just a simple cup of coffee.