The Jasper Chronicles

The Journal of a Cynical Dad

Monday, March 23, 2009

Starbucks In Decline - I'll Tell You Why

It's been well documented the past couple of years - coffee giant Starbucks is suffering.

Sales are down, stock prices dropping, stores closing, and the biggest tell-tale sign of trouble, they're jumping the shark; rolling out new products faster than you can say brand extension. Just last month, the company that moved the world away from instant coffee launched an instant coffee. Things must be getting desperate.

My fellow marketers love to dissect Starbucks. They truly were a success story. With virtually no advertising and a focused vision, they rose from a small storefront in Seattle to coffee world domination. Now that they're failing the hand wringing has begun. "They've lost their way." "Go back to core competencies." "What's with the egg sandwiches?" "Market saturation."

But there one point my contemporaries keep on overlooking: Starbucks coffee is awful!

Yeah that's a highly subjective opinion (mine), but I really believe that's the heart of their problem.

In the early days of Starbucks, there weren't a lot of shops like them. Most coffee was brewed in giant urns and served in Styrofoam cups. Starbucks changed that. The whole Starbucks experience revolved around enjoying coffee. It was unique at the time and took North America by storm. Naturally, competition came along.

It wasn't the competition itself that was the problem. It's the fact the competition was serving up better coffee. Starbucks was so busy planning the next phase of world domination, they forgot the reason people went to their stores in the first place, to have a coffee experience. Now they've become the coffee shop of convenience (they are everywhere) and not a destination; Starbucks has become the McDonald's of coffee.

Sure Starbucks has their legion of diehard fans, but they aren't the problem. The competition is making better tasting coffee for the same price, and all things remaining equal, people will go for taste every time.