Monday, February 11, 2008

One No-Foam, Triple-Venti, Half-Caf, Alpacino, Please.

Risking the revelation that I eat crap every now and then, I actually like Starbucks' egg sandwiches. No, they're not gourmet, but they're more than edible, and they're leagues better than comparable offerings from McDonalds, Dunkin Donuts, and their ilk. But the fact remains that I have mentioned those brands in the same breath as Starbucks, and that's the very reason I'm writing this.

Starbucks is in a bit of trouble. I think it's being a bit overblown because of Starbucks' high-flying stock up until recently, and as such any stumble is seen as catastrophe. Starbucks has, even as it's grown to an utterly ubiquitous brand, maintained a sense of exclusivity and cachet. This is changing. As the opportunities for new Starbucks began dropping, in the search for new locations the powers that be began opening in crappy areas and in amounts too great for given areas. For example, there are over thirty Starbucks on Manhattan. There’s only one chain with more: McDonalds. That will figure in later, but for now, Starbucks problems.

Much ink has been spilt about this over the last few months, most recently in the New York Times. More specifically, the Saturday, January 12th New York Times. It's written in the style of a letter to Howard Schultz. The same style that seemingly everyone on the friggin' web has been writing their comments on the Starbucks situation.

It's all in response to a letter Howard Schultz wrote to his executive team early last year. Basically, Schultz is decrying the loss of character in Starbucks. He misses the aroma, the theater, and the character of the "neighborhood" coffee house. And that's really it. He misses the character that Starbuckses used to have. I, sadly, wouldn't know. Living in Rhode Island, we didn't really get any Starbucks until well after they had lost all of the character he now misses.

I think the New York Times article hits the point best. The other major posting about the subject was done by a pair of ex-Starbucks marketers at The Idea Sandbox and Brand Autopsy, even Schultz, are way off.

I'll start with The Idea Sandbox, because be breaks down Schultz's statements pretty well.

Loss of Theater: This is specifically about the new, fully automatic espresso machines and how there is no longer hand-crafted espresso. Yeah. So. People don't go to a Starbucks for theater. They go for coffee. A loss of theater is not bad. It's much, much more important to get high quality coffee in the hands of customers quickly so they can either leave or sit down. This is not a fancy, high-end cafe.

Idea Sandbox guy, Paul Williams, lists some cons, as he and arguably Schultz see it.
* Beverages seem less hand-crafted. More mechanical, less personal.
* Current automated machines block sight-line between customer and barista.
* Expertise no longer required. Baristas rely on machine and skills become lazy.

All of the negatives are subjective, artistic criticisms that do not apply to everyone and could be seen as bad just as easily as good. Less personal?! This is a business, ditch the namby-pamby words. And I can't believe they're interested in a line of sight between the customer and barista. Fine, lower the counter six inches. Done. This is another non-criticism. In all my times of being in a Starbucks, no one I've ever seen has been interested in watching the barista. They place their order and then just wander off until it's called for pickup. The e-Bar at Nordstrom uses the same La Marzocco, and guess what, people act the same there as at Starbucks. They ignore the barista.

His recommendation is to go semi-automatic. Oh yeah, there's a good idea. Even Williams says how "it may take 3, 4 or 5 trials to get the shot perfect. Quality is the key." No, quality and time are key. If a barista did that they'd either be fired after they finished the shot or the customer would leave. Time is more important. We could always go with his other option, having both a semi-auto and full auto machine in the location. Also bad. Starbucks' kitchens are limited in space for a good reason, to be a well-oiled machine. They can't afford more counter space for a huge espresso machine.

And about no longer requiring expertise, when has that ever, in all of history been bad. The only reason we have affordable cars, and motors, and planes is because all of the work required to build them was taken from skilled machinists and given to less-skilled assembly line workers. The worker became inseparable from the machine, and that's the case in a Starbucks for very good reasons. A barista can be easily taught to analyze a good shot to make sure the machine did it right, and that's all that's needed. Teaching them to use a semi-auto wastes time, both the company's and the employee's.

The second major problem mentioned is the loss of coffee aroma. Both Williams and The NY Times mention this and I'm all for it. Coffee smells amazing! I love the smell of coffee. But merely putting it in stores for the hell of it isn't good enough. It wastes time, energy, and I feel manipulated. No, they need to involve coffee again in making a superior product. Fresh ground coffee, YES! Coffee-scented air fresheners, NO! And the idea of eliminating food in store is also dumb. A company is interested in growth. It should find ways to grow. If the cooking sandwiches are ruining the smell of the coffee, find ways to vent the food smell. Starbucks should try to find new ways to leverage their brand into related products, and egg sandwiches and pastry are related.

I do LOVE Williams' idea of in-store coffee roasting. Unfortunately, this would require stunningly skilled people manning the roast or a machine that does it without user input. Very, very difficult to implement, and damned near impossible on a massive scale. Roasting is an art, I should know, I've tried (and failed catastrophically).

The rest of the articles deals primarily with the marketing aspect and, while being generally accurate, isn't too important for a blog about food.

If you want to have passion, fine, run a small store passionately. Starbucks is NOT about passion anymore, and Schultz's "passion" is negative. He is no longer a cafe owner, he's a business man who is running a mega-conglomerate and he must act that way.

Starbucks has a major problem with McDonalds offering latte and cappuccino. Even if it's a failure, it will commoditize espresso even further, having a ripple effect on how Starbucks is viewed. Starbucks isn’t helping this. In many ways, they’ve been copying McDonalds in marketing direction. Starbucks does everything McD’s does except for television advertising. They need to take drastic steps to ensure that Starbucks is strongly and effectively separated from the burger joints in every conceivable way.

Starbucks has been an unsinkable duck recently, able to open a gazillion stores while still maintain an air of exclusivity. This has been, in my opinion, one of the great marketing feats of the last thirty years. Still, I recently saw a Starbucks open in a Stop & Shop. If you don't know what a Stop & Shop is, the name alone should tell you that it's not a place where Starbucks should be opening stores if they want to maintain brand quality.

Starbucks is a major chain. People WANT to go to the major chain. They enjoy the professionally designed interiors, the lightning fast service engineered by efficiency experts, the variety of expertly packaged foods, and the branded merchandise. It evokes a sense of quality.

Starbucks was totally justified in using automated machines. Starbucks can no longer be the "neighborhood" store. It can straddle the fence a bit, though. By carefully choosing locations, maintaining quality, and never wavering from their brand message and what goes well with coffee, I think they can be the Macy's of the coffee world. Not as cheap as Wal*Mart, not as expensive as Saks 5th Avenue, but still desirable.

I definitely think that coffee should be the primary smell, but never lose focus on the product. That's ALL that matters. If you cannot achieve smell through some process that makes the end product better, forget about it. Grinding coffee on site? That makes the product better and has smell, so good show. Going back to the La Marzocco machine, thus slowing everything down and throwing inconsistency into the coffee, BAD! Forget theater! Forget skilled baristas! This is business and I want a quality latte every, single time I go in. No exceptions. No variations. I want coffee and I want it three minutes ago. I do not expect latte art and master baristas at a Starbucks, and that's fine. I go other places for that experience. I go to Starbucks for the Starbucks experience, which is valuable in and of itself. Quick service, consistent quality, wide selection. That is why I like Starbucks.

And about those egg sandwiches. Coffee goes well with breakfast. Egg sandwiches go well with breakfast. Coffee and eggs go well together. Still, Starbuck’s has chosen to eliminate the egg sandwiches. They did so a week or so ago. At first, I thought this was a bad thing, but I have since changed my mind. I mentioned above that Starbucks needs to differentiate itself from McDonalds. That means they cannot… cannot have anything similar to an Egg Mcmuffin. And please, for the love of God, give me some bloody crackers in the cheese platter.


Paul (from Idea Sandbox) said...

You should check out the Frappapalpachino coming this summer.

Nice commentary.

I don't expect the fully-automated car wash to do as good of a job as the place down the street that has a team of four people pre-scrubbing and hand-drying.

And I don't mind paying more because I know when I drive away my car is completely clean and I'm not going to have spots here and there.

Because of the large number of locations and customer desire/need for speed and convenience... Starbucks has been drifting in that fully-automated direction.

McDonald's could probably find a way to make a fully-automated McDs. In fact, all they'd need is someone to unlock the door once in a while to fill the equipment with the supplies.

All they'd need is an ATM-style order/pay window and a dispensing window. Machines do the rest.

(Actually, that's a cool idea).

But that's the exact opposite of what Starbucks wants to be. Starbucks is based on quality product and experience.

Part of that quality product is ensuring the espresso shot is just right and the milk is steamed just right. Machinery can't yet achieve that. So automation is guaranteed to diminish the quality.

(Have you ever had an espresso beverage from a vending machine? Or hot chocolate for that matter? Sure it'll only set you back 95-cents, but it's just not the same!)

Being able to see how your food is being prepared is another aspect of quality. I can watch the gal at the corner choosing and slicing my bread (not pre-cut), slicing the deli meat (not pre-portioned) , adding freshly cut tomatoes (only the ripe ones), tearing lettuce (not chopped on a machine)... Each ingredient adds to the taste, nothing subtracts.

At McDonald's it pops down a shoot already wrapped in paper. Speed versus quality.

That feeds into the quality of experience as well. At McDonald's you can't see who is cooking your food if you tried. (Well, you may see them smoking out back by the dumpster). There is something that makes us uncomfortable when we can't see our food being prepared. But we trade that blind trust for speed or convenience.

Watching the barista prepare your drink right in front of you, supports the overall quality of the experience and is supposed to make it worth the money.

So, when I want a quick and cheap rinse of my car - I'll go to a fully-automated car wash. But when I want quality and it done properly... I'll invest in a trip to the hand-wash place.

Thanks for reading Idea Sandbox!

(btw, I went to school when I was a kid in Warwick. I miss clam cakes and chowdah).

Aaron MC said...


Holy moly, thank you very much for your comment. I wasn't expecting anyone like you to read it.

I agree, Starbuck's quality product is critical. Fully automated machinery of the $0.95 variety are sinfully terrible, but I don't think in Starbucks' worst nightmares would they ever reach that far.

I don't think the automation that Starbucks is using currently reduces quality, though. They use fully auto machines and I've never gotten a bad espresso at a Starbucks. I myself use a fully automatic machine from a company called Jura Capresso and it produces some excellent espresso. I have, on the other hand, gotten bad espressi from cafes that use semi-auto machines, such as the mentioned Nordstrom E-Bar. I like the consistency of the full-autos greatly.

I can't argue about the milk part, it's difficult to steam milk and that will always require training. I know the terrible side-effects of no training after having a cappuccino at Panera Bread.

I still don't think that what Starbucks has done is bad. I agree, seeing something made advertises loudly if not both quality and freshness, than certainly freshness. Still, I think the important aspect is that people know that it's being done, they can sort of see it being done, and they can hear it. Actually having a direct line-of-sight seems unimportant if it impedes other processes.

What I think is that, in many ways, the trades of hand-crafting for speed in Starbucks has been good. I like being able to go into a Starbucks and have my drink whipped up quickly.

I think my point is that quality is always paramount, but because Starbucks is the major brand, speed of service is a close second. Starbucks has the most important part of all this, a quality product. A full-auto doesn't affect that end-product in a way perceptible by most customers, and as such the speed becomes most important... just so long as quality is still high. McDonalds doesn't even try for quality. Speed is king.

I've thought about the egg sandwiches more and more, and have since come around completely. I now think eliminating them was a very good idea. Food isn't bad, but I agree that it must appear fresh and high-quality to jive with the Starbucks image. The fruit and cheese platter is good. The pre-made sandwiches were bad. I still think that food is good, and the Starbucks brand is still one of the strongest and ripe for leveraging into other areas. But, as we've both said, quality of product is critical and I think that no one has mentioned the Starbucks "products" currently for sale at the local grocery store was an oversight.

Starbucks ice cream is good, but the pre-bottled drinks in the soda aisle border on coffee-flavored snot. Starbucks may want to consider retracting further into its core and carefully re-expanding from there.

Again, thank you very much for your comment and for not getting angry that I called some of your ideas dumb.


I remember reading about McDonalds experimenting with fully automated locations run by a single person.

"Eventually they'll automate the whole process until humans become unnecessary at any point. An assembly line of efficient machines will slaughter the cows, grind them into burgers, fry them up, top them and put them on buns, chemically convert them into puddles of pickle-scented diarrhea that are then squirted directly into the toilet, and hurl trash cans through the windows to protest Western imperialism.")