Hot on the heels of McDonald’s entering the premium coffee market, Starbucks is reportedly testing a $1 coffee offering. Is this the beginning of the end for Starbucks or a brilliant ploy to get cheapsters in the door and jack them up on high quality caffeine and ply them with samples of the $5 a cup good stuff? This move by Starbucks has been called off-brand, been accused of ‘jumping the shark’, and just plain stupid. Is Starbucks confused or just changing to feed the beast?
Starbucks started out just like many other small buisnesses. A few people had a dream and they followed it. The founders of Starbucks wanted to offer premium beans and coffee making equipment so that Americans could enjoy a premium coffee at home. Enter big idea man Howard Schultz who transformed the humble company into a beverage serving giant with over 15,000 stores worldwide. If not for growth, the Starbucks name could have been some little known storefront in Seattle’s Pike Place Market.
At some point, it seems inevitable: grow or die. Many small businesses face the same challenges, yet on a smaller scale. You may not be dealing with multinational stores and wide fluctuations in commodity prices, but you’re actually in the same boat.
Take childcare for example. There was an amazing woman in Seattle who ran a premium daycare center. (Probably fueled by Starbucks coffee.) Let’s call her Samantha. Her love for kids made it easy for her to create a brand and experience that high income parents were more than willing to pay 25% to 50% more for than comparable childcare outlets charged. Her rates were the highest in town, but kids went home happy. She planned date nights for the weekend and open houses that turned out to be valuable networking opportunities for professional parents. She only hired the best employees.
Demand was great. She had the money and the clients to open a second location. All she needed was a manager. And that’s where the project stalled. There was only one Samantha. Just like there were only a few people passionate enough about coffee beans to give Starbucks its original edge. Entreprenuers sometimes find it difficult to imagine how others can be so careless about the businesses they’ve put their hearts into. But other people don’t are. In order to grow, you have to employ the labor of others and that can be one of the largest challenges a small business faces.
Not every barista gives a coffee bean about your Starbucks experience. This turn toward low quality is probably why we’ll soon be searching for the next great thing. And we’ll find it in some out of the way spot, until another Howard Schultz comes along to bring it to the world.
[...] Robert May at Business Pundit looks at the situation facing Starbucks, and how it invariably has to change, despite how well it has done so far. “At some point, it seems inevitable: grow or die. Many small businesses face the same challenges, yet on a smaller scale. You may not be dealing with multinational stores and wide fluctuations in commodity prices, but you
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