Business Lessons Learned From Starbucks

9 years ago

In case you didn't turn on the news this week, Starbucks pulled off the PR business coup of the year --the year being about 8 or 9 weeks old.On Tuesday night, all 7100 Starbucks-owned coffee shops closed for three hours to "retrain" their baristas.

This was followed up with a new company promise posted in their stores, "“Your drink should be perfect, every time. If not, let us know and we'll make it right.”

From a news perspective it was a super-charged caffeine high. CNN ran a poll. Every newscaster gave it a mention. Bloggers chimed in--including me.

However, the media frenzy will be for nought if all the attention doesn't bring more people into Starbucks on Wednesday and all the days thereafter. The goal of PR is not to just become a media darlin' for a day, it's to change behavior over the long-term.

In the case of Starbucks it's to woo customers back into the lattee line.

Whether or not the lines were longer at Starbucks is anybody guess. Seems media outlets opted to not do that follow up story instead they focused on the new Starbucks pledge. Great PR but is it helping the bottom line?

So that's lesson #1 -- PR can be a wonderful thing but if the publicity doesn't translate into increased sales then it becomes nothing more than an Andy Warhol moment.

Many bloggers are not so sure that Starbuck's PR extravaganza was focused on the real issues. From Beth Anne Whalen blogging at Business In General

With the economy on the decline, one could gather that there is also another underlying motive.  Coffee drinks (especially those that cost upwards of $4.00) are the type of luxuries people cut back on in a recession.  This is no time to be off your game. This is a good reminder for all businesses to re-evaluate where their products and services stand in the mind of the consumer. believes the switch to those automatic espresso machines was indicative of Starbuck's problems. Starbucker has been a Starbucks customer for 15 years. Like many in the early 90s he frequented Starbucks for that "third place" vibe.

But as every year has gone by, I’ve been less and less focused on it as a “place” and more focused on it as simply a means get my morning latte, and as quickly as possible.[...]Perhaps Howard sensed this same change in his customers as the Starbucks empire expanded – that certainly would explain their switch to automated espresso machines. If you’ve read Howard’s book you’d be hard pressed to believe that would be something he would ever allow to happen. But it did. They needed to push more customers through the store. “Need more growth”, the investors and analysts said. “I need my latte quicker” said Terry Starbucker (and most likely many, many more folks like me). It was a lethal combination. The vibe is long gone, and now Starbucks is just a coffee commodity competing with the McDonald’s and the Dunkin Donuts of the world. Espresso has been “McDonaldized”

Lesson #2: Understand What You Are Really Selling and What People Are Really Buying.

The McDonalds- Burger King Wars have been waging for years. In the 1980's Burger King focused its marketing on the fact that it had a char-broiled burger. Testing had proven that people preferred the taste of a Burger King Burger over a McDonalds. They developed an advertising campaign touting they had the better burger. Consumers didn't care.

What Burger King did not understand at the time is that people didn't go to McDonald's for the food, they went for the experience.

Fast forward to the 21st Century, and McDonald's was not amused when Starbucks became the "experience brand" not to mention the coffee giant started offering drive up service and breakfast sandwiches.

McDonald's began planning its attack on Starbucks in 2003. That's when they announced a remodel program that would include couches, soft lighting and oh yeah, premium coffee.

From Blogging Stocks

"Before attacking Starbucks head-on, McDonald's scoped out the marketplace, saw what needed to be done, and then began executing. In 2003, McDonald's initiated a turnaround strategy, remodeling its stores, moving toward oversized chairs and softer lighting and colors, and even installed wireless Internet.

"In 2005, McDonald's began taste testing its coffee and in February 2007, Consumer Reports magazine rated McDonald's drip coffee as better testing than Starbucks'. In a page out of Starbucks' playbook, McDonald's moved its espresso coffee machines to the front counter.

"The company now plans to roll out coffee bars with similar-tasting beverages, served by baristas, at lower prices, to its 14,000 U.S. stores in 2008.

Lesson # 3 "Cool" is a tough brand attribute to maintain.

reports that across the board, Americans are drinking less coffee. According to the magazine what is particularly troubling for the coffee market is that only 37% of 18-25 year olds drink coffee compared to 60% of 40-59 year olds,and 74% of folks over 60.

In the town where I live, the local Starbucks outlet is frequently packed with teens, but they're usually ordering frou-frou drinks that often contain no coffee. Since image, rather than caffeine, is at the heart of their choice, it's easy to see such fickle customers drawn away by McD's or even Cold Stone Creamery if either is suddenly perceived as the new hip locale.

And that's a key factor in Starbucks' sudden vulnerability. Starbucks could easily become a hallmark of this decade, that, when the next one hits, will look as dated as the grunge look does today. That's because Starbucks is more than a chain, it's a fashion statement.  [...]  But fashions have a way of changing. That's why the coffee industry may soon have to wake up to the fact that for many young people, coffee's just not cool.

Lesson #4 It's just really hard to run a business.

You can have a great idea, you can capture the hearts and minds of your consumers, you can have talented people on your team,and that is still not enough to guarantee long term success.

Starbucks is a good reminder to little ol' me that the seven year itch is a real phenomenon. it's a reminder that customers don't want to be taken for granted. That customers--even the most devoted--become bored and can smell arrogance a mile away.
While customers want to associate with businesses/consultants/organizations that they perceive as successful or cool they don't really like it when you become enamoured with your own coolness.

Starbucks reminds me that I need to be fashion-forward in a business sense and that the only way to really maintain success is to always be a little thirsty.

Elana blogs about business culture at

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