The Starbucks Phenomenon
A Cautionary Tale
In an effort to revitalize its lagging sales. Starbucks has recently changed its CEO. It’s the custom in big business in America that the top guy always gets the axe whether it’s justified or not. Flash! it’s Occams Razor guys, the simplest and most apparent reason for a downturn, or upturn , in business is usually the reason.. In this instance, It’s charging exorbitant prices for an inferior coffee!
I no longer patronize my local Starbucks, or any. I have three cafes within 6 blocks of my house selling superior coffee cheaper. And patronizing a mom-and-pop over a business behemoth always feels good. It takes a while but the arrogance of selling an inferior product for far more money than the competition will always catch up. The competition, and the buying public, is not dumb. Slow perhaps but not dumb.
Starbucks was the tide that raised all boats and for that all coffee drinkers can be grateful. But arrogance and a paucity of competition has made them king of the mountain for over 50 years and made Howard Schultz a billionaire. His novel approach to the public, access to the restroom, allowing a group to hold business meetings for hours for the price of a single cup of coffee. Mi casa, su casa! Nice guy, right. And once he had gained the country’s, and later the world’s, confidence, prices rose inexorably in inverse ratio to quality.
Schultz realized his dream. Starbucks has become a business juggernaut, referenced by comedians and film makers as part of the culture, every bit like McDonalds.
As a student of business, I saw decades ago that a few well respected business analysts proposed that a business concept, particularly in the hospitality business, has 7 to 12 years of dynamic growth and after that, it is all about maintenance and that actual growth is sporadic and ephemeral. If we ascribe to this thereom, Starbucks has been a “dead man walking” for decades. So why go through the motions? Well, there are all those jobs to consider. Keep scores of thousands employed and the public will pay. If we believe that, then maybe Howard Schultz is the ultimate altruist rather than simply a denizen of Wall Street.