Earlier today, I had the opportunity to visit Starbucks for the first time all year long. I’ll document my first legitimate investor trip to the local downtown Starbucks, and explain why Starbucks is bigger than just coffee.
Starbucks on a Corner
Like many Starbucks locations in the city, Starbucks has a proclivity for opening Starbucks coffee shops on street corners. I noticed the dark green “Starbucks Coffee” roof from 2 blocks away, and of course the iconic symbol reminded me of similar well branded logos like Mcdonald’s golden arches. The traffic outside of Starbucks was pretty heavy around 8:30 am, around 5 customers entered the shop while I stepped inside.
In contrast to the busy street cards and bustling pedestrians, Starbucks was calm and cool inside. Cleanliness could’ve improved since I noticed a few straws and napkins thrown carelessly on the floor. Other than a few out of place napkins, straws, and abandoned tables, everything appeared well in order.
Building a Strong Community
As I stood in line, I noticed other customers reading, typing, and chatting amongst friends. Starbucks maintains such a strong sense of community; it’s really remarkable to witness individuals relax and calm down on a normally hectic work morning.
The waiting line stretched about half-way to the door, and even as I waited, the line neither shrunk nor grew. The flow of customers in and out of the shop remained constant, which was nice because Starbucks wasn’t too crowded or too empty.
Plenty of Menu Selections & Fast Service
Eventually, I ordered a vente Green tea, yet was asked, “Hot or Cold?”, “Tips or Leaves?”, and “1 or 2 teabags?” Honestly, the amount of choices at Starbucks is ridiculous. I’m used to ordering a drink, and getting exactly what I requested.
Starbucks’ menu carries so many diverse combinations of the same thing that even the pickiest consumer would find something to order. Is it possible to carry too many selections that confuse customers?
After paying for the green tea, I walked over to the wait area in anticipation of my drink. There was already a vente drink sitting on the countertop, but I didn’t think it was mine. A minute later, I found out my tea was ready before I even walked over to the pick-up area.
Now, I know why the flux of customers remains constant. Starbucks baristas know how to churn those orders like clockwork. Hattip to you Starbucks baristas out there!
One of the baristas looked upset, but most of the Starbucks crew provided service with a smile. I’m not sure what the general feeling of the average Starbucks employee is, but I have never seen too many unhappy baristas. Frequent Starbucks customers, is this accurate?
Starbucks is not Expensive! It’s cheap if you’re savvy
Do not believe the critics that claim Starbucks is too expensive. It is cheap if you know where to look. Instead of buying from the shop, buy Starbucks at your local Giant, Safeway, etc. You can pick up a 12 oz Starbucks coffee house blend for $12. I see Starbucks coffee bags in the office kitchen all the time. You don’t have to spend $6 a day to enjoy Starbucks coffee.
Don’t Think Starbucks Coffee – Think Starbucks Corporation
Remember when I said, “Starbucks offers a diverse combination of menu selections?” Well, Starbucks maintains stake in the commercial supermarket business, which makes up 14.8% of net revenues.
Starbucks sells pre-bagged Starbucks coffee for home, Starbucks ice cream, pre-bottled Starbucks beverages, and for the grown and sexy Starbucks liqueuers! That’s an impressive lineup, but what’s more important is that Starbuck’s brand extends past their traditional specialty coffee stores. Even frugal customers can still enjoy Starbucks at the supermarket for a lower cost.
When you take into account the specialty store revenues from supermarket, vendor, and non-retail merchant sales, Starbucks resembles Coca-Cola, a company that built its empire on one iconic drink, Coke, and spun off multiple products within 1 degree of separation.
In the case of Starbucks, Coffee lovers not only drink traditional coffee, but love coffee ice cream, coffee liquor, and even coffee cookies! You see where I’m going with this.
Starbucks is more than coffee; it’s become a domestic and soon to be global powerhouse in specialty retail and consumer non-cyclical goods. Earnings grow at 20%, and Starbucks plans to open 2,400 new stores at the end of FY 2007.
Real Life Example of The Starbucks Effect
When I returned from Starbucks, I sat down and enjoyed my Starbucks Green tea in front of 2 colleagues. 20 minutes later, both went to, you guessed it, Starbucks.
They told me, “they couldn’t resist the Starbucks temptation.”
The Starbucks effect is alive and well.
Let Your Starbucks opinion be heard
This article may open up a can of worms, but I’m audacious enough to hit the “publish” key.
Need some motivation? Here are a few questions to get thing started:
What was your best/worst Starbucks experience?
Are you bullish or bearish on SBUX?
Is Starbucks coffee too expensive?
The real question: McDonalds or Starbucks? (Be careful with this one..)
Full Disclosure: I own shares of SBUX.
last year my wife and i had a layover at memphis airport and we went to the starbucks in the terminal. i couldn’t believe how long the line was, yet the staff moved the line quickly and efficiently and the staff was smiling! they had one staff with a headset who moved down the line taking orders before customers even reached the register. another good thing, staff tried to upsell by asking customers if they would like a sandwich, etc.. we enjoyed our coffees and watched the action.
when we got home, i emailed starbucks corp, with the above story, to pass on congratulations to their team in memphis for a job well done. i never heard anything back from starbucks. i know they receive thousands of emails, but surely a highly complimentary email would at least be acknowledged. i wanted to know that their staff was given a pat on the back. thanks.
I have never had a bad Starbucks experience. I have been in Starbucks around the country & feel very good about the experience.
I own Starbucks stock & do not plan to sell it. It’s one of my Warren Buffet type of stocks.
I only drink coffee when I go & there is no way it is expensive. I have to pay more in any restaurant I go to, IHOP, Denney’s etc. & their coffee is flavored water.
McDonalds vs. Starbucks There is no comparison. I will never go to McDonalds to enjoy a cup of coffee. They are dirty, noisy, places with plastic chairs.
OK – first of all, you should be ashamed that this is your first trip to Starbucks this year! (haha) While I can’t afford to drop in the stores every day, I enjoy making it a special occasion (weekends with the kids) and daily brew the SBUX stuff I buy at the grocery.
For a time I was short SBUX and made some decent money. I obviously covered too short and I think part of the reason I covered was because I couldn’t justify the fact I was a frequent customer and yet short the stock. Sort of like when we were short KKD and my boss kept bringing in those warm sweet wonders of the 20th (and 21st) century.
Anyway, I hope you’re right on the stock. I’ll always be a loyal customer but I can’t justify being a shareholder until they begin to show a little more traction.
Got to quit now – time to refill my cup.
I gather that you didn’t go to Starbucks during the morning rush hour. The lines are long….too long.
I’ve had a few unpleansant starbucks experience. Barista couldn’t get my coffee and bagel order right.
A staff gave me an attitude because they were closing soon and wanted me to leave asap. Hello? the entrance was open, they let me order, so as a paying customer I think I can seat for the 5 mins to finish my pastry.
I actually don’t go to starbucks as often as I used to. I think Starbucks’ service has go down compare to a couple years before.
I also meant to say…the long line moved very slowly.
Comparatively speaking, a couple years ago the line moved much faster, not anymore…another reason why I don’t go to Starbuck’s as often.
Obviously, this is my experience and my opinion…
I personally feel that starbucks has stagnated and growth will no longer be as high in the coming years.
As long as American’s are willing to spend $$$ on gas-guzzling SUVs, I see no reason for them to stop buying Starbucks products any time soon.
Starbucks is “Everyday Investing” multiplied by 10.
I don’t think Starbucks has stagnated, especially when I am waiting in the drive thru early every morning! Perhaps the prices are high, but that is the market they cater to!
I love Starbucks, but I don’t think they should have added the food!