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17 January 2010

What should Howard Schultz do in London?

The news that Howard Schultz, Starbucks' Chairman is due to present the firm's financial results in London this week is interesting.  As the Telegraph points out it is because Starbucks is keen to demonstrate that the firm is a global brand.  London has been chosen for the honour because the UK is the second biggest market after the US.

I'm guessing that in the results presentation he'll be keen to push his message that they are not the evil empire - it's the week for it - and they serve really good coffee to coffee lovers.

I feel that as a Londoner and coffee lover I might be able to suggest to Howie some things he should do whilst he's in town, to take his mind off the drudgery of meeting investors:

  1. Meet Gwilym Davies and James Hoffman - these two men, often in concert, are at the forefront of London's exciting coffee scene.  Not only are they making black gold sexy, they are also putting the science into coffee because they're passionate about it.  They're evangelical.  They want every cup of coffee to be the best, because they want everyone to enjoy coffee as much as they do. 

    I assume they share this with Howard.  If Starbucks is a global brand, Schultz must be seeking a level of homogeneity in the coffee he serves.  The same tasting coffee is not necessarily a bad thing, unless it tastes like pissenwasser.  If I knew that in every city I could get a latte as good as the one I had on Friday from The Milk Bar, I'd be very happy.
  2. Meet me - I'd explain that I can't stand Starbucks because I can't stand the coffee.  Simple as that.  It all comes down to the product and I think it's bland and nasty.  I've sent an email to his PR and IR people to see if they've got a slot free.
  3. Meet Silverbrowess - she'd explain that she loves Starbucks.  Really loves it.  She loves the coffee, the more syrups the better.  For her, it's all about the product.  It's perfect and her mood distinctly improves when she see the chaste mermaid.
  4. Drink some tea - he should meet Henrietta Lovell and remember what it is to love the product you're selling and how to do the best by the people producing your raw product.

Why do I care what Starbucks does?  Because I can't help but be excited about the prospect of so much good coffee doing the rounds.  I'm a mug-half-full kind of guy, but I am also a realist and don't hold out much hope that Starbucks does actually care about the flavour and quality of the coffee it sells, despite Howard's protestations.

I do wonder whether it is possible to have a large food or drink company, that retains the elements of what made it great and is attractive to investors.  And don't get me wrong, I've got nothing against being driven by an economic imperative. There is not a single company that doesn't exist to make money.  But can an entrepreneur with a passion for food and drink can ever scale their business so that they keep others with a similar passion as happy as they keep investors?  You might as well have a go.

Howard, whilst you're here take advantage of your time.  Understand why you're loved and loathed, and then do something about it.


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Very interesting points but ultimately the biggest problem with Starbucks is the fact that it's because of their sheer size that they could never make the quality of coffee that James and Gwilym do, not because of desire but because of pure economics.

You might think that Starbucks may be competing with the likes of Milk Bar, Flat White, etc. etc. but the reality is their competition is Pret, McDonalds (esp. in the states), Costa, and Caffe Nero.

The cost of making a decent cup of coffee is not high, but high enough that Starbucks wouldn't afford the tony locations they are in. There's a reason why there aren't any independent coffee shops on the high street--they can't afford the rent plain and simple.

Selling a product at a 1% food cost makes rent affordable when most independent coffee shops pay 20-25% food cost.

For Starbucks to even raise the quality of coffee even a fair bit, would afford them no noticeable gain in audience, as the quality still would not match that of 3rd wave shop, and for those who drink coffee but don't have the palate for it, the difference would be undetectable.

@Bea, I see what you mean and agree. I know they're not interested in the likes of thee and me - but as a consumer it's a shame. Especially as Howard keeps making noises that he wants to return to great coffee.

Then again they are a business and therefore there to maximise their profits, and we're not going to help them do that. They'll only achieve it by striving for mediocrity.

A wonderful post on a level above the usual Starbucks bashing. I hope it's not just Howard – and, for that matter, not just coffee and tea people - who takes to heart the essential point in suggestion #4 about remembering what it is to love the product you're selling.

In Melbourne, where coffee runs passionately through the veins, Starbucks has been virtually put out of business. Good coffee should be made with as much passion and love for the stuff as good food -you'll never get that from chains in the mould of Starbucks. I love that so many great coffee places, good enough to satisfy any caffeinophile Melbournian, are now popping up around London - there's no need to drink second rate, soulless coffee here anymore.

@youngandfoodish, thanks for the comment.

@Greedy Diva, thanks for the comment. Whilst I'm all up for better and better coffee and food, I do wonder if you're right that chains and good food are mutually exclusive. I know you're in Melbourne, but here in the UK there are a couple of new concepts, I'm thinking particularly of Princi and Moolis that have got roll-out stamped all over them. Whilst they're unlikely to enjoy S'bucks' world domination, I'd like to think they can maintain their very high quality as they grow beyond one outlet.

Agree with you that Princi is great (and I don't rule out places on the basis they open up more than one outlet) - but I don't lump the likes of Princi in with chains "in the mould of Starbucks" or Maccy Ds. I reckon Fernandez & Wells could be rolled out too, and I'd still like it if they maintained the same sense of character and quality. (I'm London based too).

@Greedy Diva, I'm not sure there is such a vast difference is there?  S'bucks started out as a small boutiquey place. It grew exponentionally and has resulted in it being the size it is today.  As I said in my comment, I don't think Princi are after world domination, but they must be keen to expand the brand. My point was that I hope they do so in such a way that they don't lose what is good about it.  If there were a Princi on every high street as good as the one on Wardour Street, I'd be singing from the rafters.  But that's pretty unlikely given that roll-outs all to frequently damage the core product as it becomes industrialised.

Don't get me wrong the quality of the coffee is important. Very important. I don't care for Starbuck's coffee at all. But I do go to Starbuck's to get some work done occasionally. And for me this is where they can come into their own by providing a "third space" where you can meet people, do some writing, edit some pictures, mess around on the internet, do some blogging etc.

If they could get this environment right and not charge a fortune for wi-fi I'd find myself visiting Starbucks more often. But. Because the coffee is insipid and weirdly sweet and the internet isn't free it's hard to find a reason to go there.

This might sound a bit odd, but maybe they need to take a leaf out of McDonald's book. They should listen very carefully to what consumers are saying, especially the most negative comments and sort out their interior design and rethink their product range.

I don't think Starbucks are an evil empire. But they are in a unique position to give something back to the world and lead us into a new model of capitalism that helps to make the world a better place.

Jonathan I agree they serve a useful purpose.  I find it jarring that some of the other coffee shops like Flat White don't have free wifi, but then again, I suppose they don't want people sitting in there all day sipping their £2.30 latte.  I reckon it's fairly easy to overcome that issue though.  You impose a rule along the lines of spend £5 and get an hour and a half wifi free or XGB download.

I don't understand why Starbucks wifi in the UK isn't free, other than for card holders, it is in all US Starbucks.  Clearly though UK customers don't speak loud enough, because they have done a pretty good job listening in the US with My Starbucks Idea, but it is very US centric.

As for a new model of capitalism, I fear the caffeine's gone to your head ;)

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