Tuesday Weisblog: “Grounds” for a visit to Starbucks?

coffee-1Almost no one who gets coffee and food products at Starbucks has anything negative to say about their quality. But most everyone does complain about the prices (though they often bite the bullet and pay, anyway).

Well, your complaints have been heard and the company has done something about it! They will soon be offering a combo deal that will net you either a latte with coffee cake or “drip” coffee with a hot sandwich. The price? A much more reasonable $3.95 – which Starbucks says is a savings of $1.20 if these items were bought separately.

Starbucks CEO Howard Schultz has said for years he’d never do something akin to a “value meal,” yet here it is. It just goes to show you how much his company’s sales have slipped since the economy went south. Of course, the additional external competition (cheaper competition, I might add) such as McDonald’s doesn’t help Starbucks, either.

At the end of January, Starbucks announced that U.S. stores open at least a year had seen at least a 10% drop-off in sales; worse yet, their net profit sagged at a rate of a jaw-dropping 69%.

According to Starbucks, this is not the end of their cost-cutting measures. They feel it’s time they adjusted with the times. I, too, think Mr. Schultz and his marketing people made a wise decision; after all, what they are currently doing is not working.

Back in the good old days, I could get whatever I wanted from Starbucks on the company dime. These days, coming out of my pocket, I would never dream of a $4 coffee … but I might consider a $3.95 combo.

Thank you, Mr. Schultz, for changing your mind.

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3 responses to “Tuesday Weisblog: “Grounds” for a visit to Starbucks?

  1. McDonald’s is far from a “great company.” But the company is positioned right for the biggest recession anyone alive can remember. It’s taking advantage of that position – and in the process will likely crush Starbucks. When people are ready for a cozy chair and soft jazz with their coffee they won’t want to stay with McDonald’s. But very likely Starbucks will have killed itself by inviting head-on competition with “value meals” that allows McDonald’s to crush them. Read more at http://www.ThePhoenixPrinciple.com

  2. Adam … went over and read your blog. I think you raise good points, too. I understand your theory of diminishing the value of the Starbucks product, but they have to try something different because they are losing stores all over the place.

    All things being equal (or close to equal) price-wise, I’d much rather go to Starbucks and enjoy the ambiance than go to McDonald’s and listen to a bunch of screaming children.

    That said, for the reasons you point out, I am still not sure this value deal concept is going to work, either. It’s a catch 22. Their prices are too high – but if you lower them it takes away a certain degree of exclusivity.

    No matter what your opinion is, Adam’s blog is worth the read. Click on it above – and thanks, Adam, for your response.

  3. McDonald’s will never be in the same category as Starbucks. In the words of Larry the Cable Guy, “What in the world….?)
    I have to have my Starbucks fix every weekday morning. Yes, it is expensive, but it is my reward for dragging myself out of bed and driving 25 minutes to get to work. However, I do draw the line at a $5.00 latte. Instead I usually order the hot chai tea and sip on it all morning. $2.00.
    Friday afternoons I allow myself a frozen frappachino with a shot of expresso. Those ARE about $5.00, but I only indulge once a week. Again, it’s a reward thing with me. (Never underestimate the power of rationalization.)

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