Wednesday, April 30, 2008

CEO of Starbucks Pushes the "Experience"

Too bad the numbers were kind of crappy. Also they seem to be scaling back their expansion to cut back on costs. That seems reasonable to me.

Yet, last week, Schultz blamed the down economy for having to cut guidance for the quarter and warned investors to expect the blow.

Revenues for the second fiscal quarter totaled $5.3 billion, 15.2% year-over-year. United States revenues were up 5.5% to $1.9 billion. Total costs of sales increased 17.1% to $1.1 billion.


At least revenues were up and I think the founder has a good idea about how to make the brand relevant again. I think most of what Starbucks used to sell was an "experience" and not just overpriced coffee. If you want value coffee you go to Dunkin Donuts or McDonalds and sit at a sticky table next to a screaming baby. If you want "coffee-house coffee" you go to Starbucks.

I think Schultz will bring back the value-added part of the Starbucks experience and get away from trying to compete on price. Things like introducing breakfast sandwiches (which tasted awful) distracted them from their main goal of serving a coffee-house experience with your overprice Latte.

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