Wednesday, February 27, 2008

Rubinfeld is back

Arthur Rubinfeld is back at Starbucks after a few year soujourn that saw him take over the helm of chief development officer at Potbelly Sandwich Works. His new position: president of global development. That's a big deal! Arthur took Starbucks from about a 100 stores to thousands. He's been here before and he's a winner. It sounds like Starbucks is getting the old band back together.





I would have loved to have heard that conversation. "Hey Arthur...seriously...we're going into hyper drive here - Int'l is going to save the day - you're our 'main man' once again...come on back - won't you please?". I'm not sure Howard was begging, but either way, it's a great move. It just rings of another all-star, 'Howard is righting the ship quick-fast' kind of move.

Side note: Potbelly. What's the deal here? Here's one of the all-star "up and comers" that has significant Starbucks money and executives behind it - ala Arthur Rubinfeld. Does this most recent move mean Mr. Rubinfeld merely set the blue print in motion for Potbelly to grow accordingly, or is the "Potbelly thing" just not that exciting anymore? Perhaps too slow of growth for the likes of hyper growth Rubinfeld? Perhaps Potbelly - with operating margins north of 20% in some stores - and mirroring Starbucks like returns in terms of profit generation selling SANDWICHES - isn't able to grow that model across the country like you might be able to if you were, say, selling a drug like caffeine. Just a notion. I'm not sure.

I do know that in Potbelly's backyard of Ohio, USA, their growth was er...slower than anticipated or, more precisely, hoped for. Stores in the Columbus area were not growing at the spectacular rates seen in Chicago or D.C. And stores in Dayton weren't pulling their "Potbelly Star Power" either.

I sure wish Potbelly would grow some legs enough to move out west! Look for California stores in '08? Perhaps '09?

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Wednesday, February 13, 2008

Howard Says: Close All Stores!!!!

"The notes and emails just keep coming" one barista told me just before flopping his head backward in a motif of exhaustion. He added: "Whatever Howard says....goes! Our wall says "Howard Says" and we have his emails posted there...."

Sudden impact!

$1 coffee, free wi-fi and now...the "emergency re-training" of baristas and the manner in which they make their drinks.

The hits keep coming. This is a man on a mission.

Howard says: close down every last store on Tuesday, February 26th starting at 5:30pm so every barista in each of the 7,100 Starbuck stores will learn how to improve the coffee. This is no doubt a fall out of years of declining quality in their core product: great, high quality coffee.

But how much can you change with an automated machine?

It turns out a few things are already taking place.

1. As of just today - February 13, 2008 - the partners are now pouring two shots instead of a single shot for each and every coffee made. 'Pulling' 2 shots improves the probability of a higher quality shot. It provides more balance and decreases the probability of a watered down shot of espresso.

2. As of today they are also administering shots of espresso into clear shot glasses. Before this change Starbucks baristas were merely administering them straigt into the paper cup. Pulling espresso into shot glasses allows the baristas to check for quality and consistency.

How do the partners feel about this "emergency" closing?

"It makes it seem like it was our fault when in fact the problems at Starbucks stem from decisions corporate made about the business in general over the last few yeasr...like growing too fast"

"This just makes it seem like its all our fault...."

Do others feel this way?

"Mostly...yes"

He added: "Other changes are coming...less knick knacks around the store....more focus on the coffee"

Amen.

Howard's next challenge: not only instituting long needed change, but maintaining and growing morale as Starbucks moves forward in the new era of Howard Says!

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We Now Have Wireless

Just one night before the big announcement, I created a post with the following opinion: Starbucks needs free wirless that works!

On Monday morning I woke up to the following story:

FREE WI-FI IN THE BREW FOR STARBUCKS

What a great deal. Both iniatives were addressed. This new service will, in large part, be free, and better still, this Wi-Fi will actually work! AT&T is most likely the stronger of carriers when compared to the T-Mobile Hot Spot Network.




Details:

* Unlimited Free Wi-Fi for AT&T subscribers and Starbucks partners.

* Card holders: All others only need to plop down $5 on a Starbucks Debit Card to have 2-free hours of wireless service per day.

* Beyond that, you'll need to pay $3.99 for two hours, unless of course you get the Starbucks ($5 minimum) debit card - a nice built in incentive to get the card.

Way to go Starbucks. You addressed all three major problems:

1. FREE v. PAID Wi-Fi
2. Wi-Fi that actually works
3. and kudos to addressing the stagnation problem mentioned in the below post.

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Sunday, February 10, 2008

Free Wireless, That Works Please...

Starbucks wireless does not work!





I’ve been trying to establish connectivity at Starbucks cafe's for the past couple of years now, and I’ve found the service to be intermittent, moody and consistently unreliable. This always crosses me as very "Un-Starbucks-like" and I've never quite understood why they don't take this iniative seriously. Considering other "free wireless" opportunities out there, including Whole Foods , Panera Bread, Stumptown Coffee Roasters, Zoka Coffee, Tully’s, and Top Pot Donuts, it's apparently being established, at least in part, that retail wireless connectivity is both a workable opportunity and viable business option that would make sense on more than a few fronts for Starbucks.


Currently Starbucks offers a wireless “Hot Spot” option via an outside carrier – T-Mobile. The current package options at Starbucks, via T-Mobile, include a $10 day pass or a $39.99 monthly pass. If you're a T-Mobile cellular subscriber, the cost is $19.99 / month.


That’s pretty steep considering the available opportunities out there are $Free.00, but it's not entirely prohibitive, especially if you're an avid user i.e. someone who does business online a lot outside of the office or who travels a lot.


But the concurrent and more pressing issue is that the T-Mobile's “Hot Spot” option is mostly unreliable. I’ve talked with many, many customers across the country and the feedback is similar: T-Mobile hot-spots are spotty at best. You can connect but will often lose connection.




Because of this, Starbucks wards off the prospect of housing a drone colony of single purchase, low spending, single coffee cup drinking internet zombies that occupy single tables for hours on end. This is the worst case scenario associated with offering free-wireless at Starbucks, and apparently a consideration for top management to keep the status quo. This status quo of expensive wireless connectivity that doesn't even work is very inconvenient if you’re someone like me who loves Starbucks coffee and The Starbucks Experience. I am increasingly put off by the impractical nature of not being able to consummate a portion of my working day in one of their café’s because I know I can’t have a reliable connection to the internet. I either have to stay at home, stay at the office or go to another “3rd place” option.



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And I'm not the only one. It has been my experience that when Starbucks is less than full capacity, even a quarter capacity, other outlying retail operations that do have reliable free wireless options are humming along at near full capacity. And they don't have the drone colony fall out either. Sure, people stay there for hours at a time, but others stay for brief periods of time to check email or the daily news and then move on with their day. This is why, in part, Starbucks is ultimately missing the boat.

There are additional considerations for a reliable free wireless initiative at Starbucks:




1. It provides an additional entry point for new customers, a very relevant consideration in today’s increasingly competitive environment.

2. Right now, internet connectivity that is both expensive and does not work is a poor feature to their brand. The message currently being conveyed is that Starbucks is behind the times, slow and unwilling to adapt to the current environment of wireless technology. This insinuates that Starbucks isn’t really paying attention. This type of execution, or lack thereof, does not bode well for the brand that is Starbucks. With free wireless that works, I'd get a different message altogether, especially if they were to strike up some sort of savvy deal with a company and brand like Google.




3. Who’s inclined to be on computers surfing the internet using wireless devices? From afar I would assume its part of the overall demographic target of Starbucks – upwardly mobile, $5 coffee purchasing, sometimes buys a bag or two of Starbucks coffee roast kind of people.


4. Reliable free wireless increases the probability of generating a fresh repeat customer base i.e "an additional entry point".


5. Similar to point #2, free wireless connectivity at Starbucks offers a better brand proposition – and the opportunity to expose people to that proposition for longer periods of time.


6. A renewed increase in store over store sales and # of transactions.

Perhaps Starbucks fears café’ stagnation! This is a valid concern. They might fear an inability to turn tables sufficiently to generate and operate the business they envision. There are multiple ways to address this concern and the benefits and opportunities as mentioned above outweigh the risks. Starbucks can implement time signatures that kick people off after an hour or two. Starbucks can politely request, via digital sign through, that people limit their time to 60 or 120 minutes. There are various options available to increase flow through the cafe's.

Starbucks will figure it out. I just hope that whatever they do, they do something other than the same old thing - at least than I’ll know Starbucks is, once again, paying attention!

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