Shop Talk

Retailers, consumers and prices

Starbucks eyes breakfast bargains, dumps the jet

January 29, 2009

STARBUCKS/Once upon a time, Starbucks had nowhere to go but up.

My, how times have changed.

Chief Executive Howard Schultz in July said the upscale coffee chain would not combine menu items and sell them at a discount, a move made popular by fast-food chains like McDonald’s.

“We’re not going to go down the fast-food lane,” Schultz told investors back then — when the company’s business was hitting the skids in a housing-led slowdown.

On the heels of news that McDonald’s will finish adding McCafes to U.S. stores by the middle of the year, Shultz is now touting a plan to offer several “breakfast pairings” at “attractive price points” beginning in March.

“The question of value often gets tied to the competition. How are we competing with (quick-service restaurants)? How can a premium brand be competitive when customers are trading down on everything from houses and travel to clothing and lunches out?” said Schultz. “We will combine our breakfast strengths with a value proposition that challenges misperceptions about our every day affordability.”

As it pays the price for its expansion exuberance, Starbucks is slashing another 300 namesake cafes around the world, bringing its closures to 1,000, cutting thousands of jobs and putting its brand new Gulfstream jet on the blocks. 

seattlesbest2In the midst of it all,  Starbucks hopes to attract Seattle’s Best Coffee franchisees.

“We recently began exploring ways we could leverage Seattle’s Best Coffee brand to work for us, starting with a food service test in more than 2,800 Subway restaurants in the US beginning this month,” Starbucks Chief Executive Howard Schultz said. “I’m pleased to share with you today (that) we are expanding our franchising program with Seattle’s Best Coffee.”

Starbucks executives even suggested that Seattle’s Best franchisees could be good tenants for stores that will been vacated in the latest round of Starbucks closures, which bring the company’s total store closures to nearly 1,000.

Starbucks bought Seattle’s Best in 2003.

There are currently 12 Seattle’s Best franchisees who operate 36 cafes — some of which are located in Las Vegas casinos. Borders bookseller and grocery chain Albertsons are among the stores that house the more than 500 Seattle’s Best licensed cafes.

Comments

Word of advice to Howard and other leaders with fixed opinions….NEVER SAY NEVER.

Posted by David Anderson | Report as abusive
 

Starbucks is already the neighborhood coffee shop. Why not shift gears and product every evening from 7p.m. until 11p.m. and become a neighborhood “bar” serving only a good range of bottled beer and wine and cheese and bread in addition to coffee and tea for non-drinkers.

Posted by stan smith | Report as abusive
 

I like the idea of expanding Starbucks into the neighborhood “bar”. It would impinge on the Wine Bar businesses only slightly. We are a Me-too type of society and a uniform bar experience is something a good number of people would go for.

Posted by L Gilyard | Report as abusive
 

I also just read another article talking about closing these additional 300 stores, but they will be opening another 140 in the US and 170 Internationally. To me, that is opening 10 more stores. Granted they will be closing 200 US stores out of the 300, so we will be loosing approximately 1300 us jobs if they are loosing on average 22.3 employees per store closing. Under that philosophy, they are actually gaining 223 employees Worldwide with this announcement.

http://www.bizjournals.com/stlouis/stori es/2009/01/26/daily49.html?

When will the media focus on pumping optimism back into our society and help turn this economy around?

Posted by Chuck Shirley | Report as abusive
 

Expanding the selection for the night business is a great idea. Our neighborhood coffee shop offers beer and wine and the occasional folk singer at night. They fill out 2 floors of tables on most nights.

Posted by Alan Sterling | Report as abusive
 

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