If you know me, you know I’m a Starbucks P1. A number of years ago, the company did an extensive customer segmentation study. I fell into a group called “Super Regulars” – the name speaks for itself. I don’t know if Starbucks still utilizes these customer groupings. Then again, I’m not sure what playbook they’re following.
Even though I’m a 7-days-a-week customer, there’s obviously a lot I don’t know about the inner workings of the company or even running a coffee shop.
First, I’m on the outside with no real idea what’s really going on inside their Starbuck’s Seattle headquarters. And second, Starbucks has had considerable turnover, starting right at the top. Last month, their former CEO, Laxman Narasimhan, was hastily replaced by the now ex-head honcho at Chipotle, Brian Niccol.
While I’m sure he has many goals and imperatives entering the corner office at the troubled Starbucks, the #1 thing on Niccol’s to-do list is simple:
Fix it!
Time is of the essence when you’re the new CEO in the business world. Hit the ground running. Turn it around. DO SOMETHING!!
After all, reports are Niccol will be raking north of $40 million, which might have set the record for the best paying remote work job ever. Niccol will be able to WFH rather than move to rainy, dank Seattle from his home in sunny Southern California. Of course, he’ll have use of a corporate jet for his commute.
But for all that compensation, the expectations are that Niccol move the needle. Put some points up on the board. Change the world. DO IT NOW!!
Niccol got the message. He started his new job at Starbucks on Monday. And just yesterday, he wrote an open letter to all is constituents: customers, shareholders, and the company’s rank and file workers.
His main conclusion?
“We have drifted from our core.”
Now where have we heard that before?
If I had a buck for every broadcaster who said that to Jacobs Media as they were hiring us to “fix the station…”
So, Brian Niccol, what’s the plan? You’ve held down the Starbucks CEO job for about a cup of coffee now – so what’s your fix?
Two things…
- Serve better coffee
- Create an environment where people want to hang out
The taste of the coffee has always been very much a matter of taste…literally. For some, it tastes bitter and even burned. For others, it’s the best ever.
The stores themselves are a different story. The goal has traditionally been that Starbucks should become your “third place.” That is, after home and work, it’s that next place where you spend time, a spot where you can check your email, get a little reading done, spend time with friends, and just hang out.
These days, that’s become a tough putt. The cafes (as they’re called) seem to have less seating, with many more people congregating around the drink pickup area. In fact, Starbucks has been building “pickup only stores.” There are no chairs, couches, or high-tops. These are purely transactional stores where you pick up your drinks – and GO.
An opinion piece in Inc. by Justin Bariso lays out the daunting challenge facing Starbucks, and “the fix” Niccol is proposing.
But what if he’s fixing the wrong things? What if he’s trying to repair things that aren’t broken? Or what if he’s not addressing the actual conditions that are dysfunctional and misfiring?
How many times have we watched radio stations do exactly that? How often have we watched management demand action, only to end up jettisoning something that was on the cusp of succeeding? And how often does that last book of the old format shoot up, after the station has already gone off in a new direction.
“The fix” is rarely a sure thing, especially when we’re talking about a storied brand that was once immensely popular and massively profitable. While I have never been employed in the food service industry, I have seen a number of Starbucks policies over the years that no doubt added boxcars loaded with dollars to the bottom line – while compromising the experience and eroding the brand.
We can relate to this phenomenon in radio. Inflated stopsets, less talent, compromises on the product, a near total absence on outside marketing – all have conspired to deliver profits despite putting station brands at risk.
In the case of Starbucks, it strikes me there are other forces – not addressed by Niccol – that are the root causes of the product suffering, the experience feeling mechanical, the service suffering delays, and the brand losing its uniqueness.
If I were consulting Starbucks (and believe me, this is NOT a pitch), I’d simplify the menu. There was a time when food wasn’t being served along with your favorite beverages. And the other problem is there are now an estimated 170,000 different drink variations at your neighborhood Starbucks. Your once-friendly baristas are frazzled, harried, and burned out.
An opinion essay in the New York Times by Inc. editor Bill Saporito makes the case those sprawling orders are crippling the operation because of their peculiarity and complexity.
“Can I get a Grande latte, with three shots of espresso, with soy milk, a drizzle of vanilla, extra hot….with a stopper? And can I also get a vente ice water?”
As someone whose order is always a Grande dark roast – that’s it! – I would support a “Less than 5 words express line.” If you can condense your order down to five words or less, you get to stand in an expedited line. But I digress…
It’s not just the orders. It’s the different pathways where you can now place an order and retrieve your drink. In many stores, you can:
- Place a mobile order on the Starbucks app and pick it up in a special area in the store
- Or you can pick up in the drive-thru
- You can even do mobile orders at Starbucks stores in most airports
- Get in line at the drive-thru and order/pick up your selection and pay at the pickup window
- Order your drink(s) via Door Dash and let one of their “dashers” bring it to your home, apartment, office, gym, etc.
- Actually walk into the store, place your order with a barista, and wait along with the mobile orderers at that special area in the store
If you’re trying to do any of the above during a high volume time of day, the process can be crowded and chaotic. I’ve seen customers who placed their orders and paid for them simply walk out of the store emptyhanded out of frustration. I expect some of them don’t return.
Will new CEO Niccol be successful in re-establishing Starbucks as a viable “third place?”
Will he be able to simplify the operation in a way that leads to a calmer, cooler, more welcoming environment?
Not unless he figures out a way to address the company’s “content and distribution” problems – getting quality coffee drinks into the hands of customers in an efficient, pleasing, and friendly way. And if I’m correct in my assessment as one of those customers, this is a pathway any well-designed research study would identify.
But as we know from radio experience, not every step taken by the new leader is based on a whole lot more than gut calls, rather than a methodical investigation to best determine a brand’s true
S.W.O.T. profile. What’s working? What’s not? What is our superpower? What’s our special sauce? What is our kryptonite?
It is one thing to “fix it.” It is a completely different thing to fix what’s really broken. The world of marketing is filled with miscalculations where newly minted CEOs or program directors ended up fixing the wrong thing.
As a Starbucks customer, I hope Niccol gets it right in the same way that audiences hope we radio programmers and strategists have created the best strategy and execution.
Oh, by the way, make sure there’s “no room” on that Grande dark roast.
Thanks to Sal LoCurto for the inspiration. – FJ
Jacobs Media has consistently walked the walk in the digital space, providing insights and guidance through its well-read national Techsurveys.
In 2008, jacapps was launched - a mobile apps company that has designed and built more than 1,300 apps for both the Apple and Android platforms. In 2013, the DASH Conference was created - a mashup of radio and automotive, designed to foster better understanding of the "connected car" and its impact.
Along with providing the creative and intellectual direction for the company, Fred consults many of Jacobs Media's commercial and public radio clients, in addition to media brands looking to thrive in the rapidly changing tech environment.
Fred was inducted into the Radio Hall of Fame in 2018.
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I love this one. If you’re a CEO, talk to the troops, talk to your customers, sales and listeners. Know your market as much as you can Before you make your changes. That means getting into it before your due date. If you have the dollars hire these guys because they are good.
Thaanks for this comment, Jay. it’s the basic stuff, but so often missing from today’s process. Best to you.
Make it better and where people want to hang out & listen longer. It doesn’t take money, it takes ascertainment (remember that?) and application. Regional taste is the secret sauce. News you can use. Listenable, whatever the format. Yes, the fix has to be in and the time is now. It doesn’r cost big bucks, just Authentic Input. Thank you, Fred.
Spot on, Clark. And not only do i remember “ascertainments,” I believe they are a missing element of the proceess. Thanks for dredging up that memory. (There’s a blog post here!)
Used to love Starbucks as a hangout – grab my drink, plunk into a deep-cushioned chair and read or write. Got the munchies? Grab a scone. Then they renovated their stores to look as antiseptic (read “uncomfortable”) as possible, with few tables and lots of lanes to drive through. And non-snacking items.
I went to a new local store two years ago, that had pastries, great hot and cold drinks and looked like an updated version of Cafe Perk from Friends. They were great…for a couple of months. I stopped going when they told me the pastries in the case were there for decoration. A new store opened less than a mile away that had the best Italian pasties I’ve ever had, and coffee to match – and had comfortable seating an the nicest people waiting on the counter. That became my go-to for coffee and croissant.
My daughter was living with me over the summer, and insisted we go to the place she fell in love with two years before – the one with the pastry decorations. Guess what? They pivoted. Their pastries are now plentiful and fresh – so, yeah, now I go there as well as to my new favorite store.
But I don’t go to Starbucks. They did NOT change…or rather, change back.
You likely echo many people, Dianna, with your Starbucks observations. Will the new guy fix the right things? I’m skeptical based on some of the initial comments, but I will be watching closely from my seat in the corner.
I have found after reading many company “near death experiences” and autopsies, that the survivors generally are those who make changes on the asset side of the balance sheet (namely, improving the product) as opposed to those who start cutting on the liability (expenses, generally employee costs) side.
Interesting observation, Kurt. I hope the right people read it and take it to heart.
When you talk about things that need fixin’ someone needs to pay attention to “the little things”. Promos about music – into long commercial sets. Websites with broken or outdated links. Broken promises (The MOST music!). A number of businesses have crushed themselves many ways. “The Dollar Store” isn’t. “Instant Oil Change” isn’t. Many business blunders exist because the CEO isn’t in the “trenches” with the employees, but instead with a nose buried in the books wondering how to make the next bonus. Radio, like Starbucks has to realize there really is another place for people to go for entertainment and -compete!! Really compete. Resting on their laurels will only create more frustration and failure.
Dave, remember when jingles ALWAYS led into the next song?? Why does radio play promos and jingles for themselves…going into 8 or 10 minute stopsets?!? The next thing I want a listener to hear after my call letters is a SMOKING hot song!
Preach, Dave, preach! No arguments here.
You’re right with the “less than five-word” order. When I get behind one of those people, I usually just turn around and walk out because it will be a half hour before I get a simple cup of coffee.
But you’re more right with “it tastes bitter and even burned.” At least, that’s what I think. Starbucks is never my first choice. Why do they burn the coffee beans?
I have never been able to explain the Starbucks MO of coffee brewing/burnning. But nonetheless, it is one of the few addictions I have left.