We Fixed It, You're Welcome - Balancing Act: Starbucks' Brand Dilemma

Starting point is 00:00:00 All right, here's how this works. In each episode, we pick a company we all know that has something going on right now. Then we put ourselves in charge and see if we can fix it. You'll be hearing from Melissa and Operations, Chino on people in culture, and me on marketing. My name's Aaron. As always, a quick disclaimer, we are going into this somewhat cold and nothing we say should be construed as legal advice, financial advice, or anything that would get us in trouble. These are our views and opinions. We're here to ask the kinds of questions everyone's thinking, have an engaging conversation, and maybe come to some conclusions that we feel are worth exploring. By the end, if we fixed it, you're welcome. All trademarks, IP, and brand elements discussed are property

Starting point is 00:00:53 of their respective owners. Welcome back to We Fixed It, You're Welcome. We are your fearless fixers. You've got Chino, Melissa, and myself. We are amped up and ready to fix whatever gets thrown at us, and today we are here to fix Starbucks. Now, myself, I'm not a brand loyalist, but I I'm a coffee drinker. I won't tell you about every time I've been to Starbucks. That would take a while. But I will say I've been to the original store because that's what you do when you're in Seattle.

Starting point is 00:01:17 You got a Starbucks number one. You know, Melissa, any big memories or recollections about Starbucks? Yeah. Actually, Aaron, you just brought that up. The original store I used to live in Seattle 30 years ago. And I remember that Starbucks down there on Pikes Place Market. It's not that you probably thought the same thing as I did, but it's not that nice compared to other coffee shops.

Starting point is 00:01:38 I was surprised how Starbucks was the one who took off because at the time, if you lived in Seattle, that's not where you went for coffee. You went other places, including Seattle's best. Other places were more hip, hipster for the crowd then. And so it's a remarkable story that they have. And they're in a very interesting phase, as many companies are, that we've talked about in different situations. But from a business perspective, how do you evolve? and how do you keep up and how do you stay true to your brand loyalist?

Starting point is 00:02:13 So, yeah. How about Chino, you in Canada there? I, you know, I'm not a big coffee drinker, but I, you know, I discovered the venty ice latte vanilla a few years ago and I have like a hyperfixation on it. But on a recent trip to Chicago, I visited the roastery there, which is the largest Starbucks, I think in the world, which is incredible. They have multiple tiers on like the top floor. There was a little bar.

Starting point is 00:02:46 I was in between meetings at like 2 o'clock. And, you know, it was just myself because I just wanted to check it out. And it was such an incredible experience. And like they had like these little flights of different coffees with, you know, paired with a little alcohols, had a nice little happy hour with some strangers. And it was a really great experience. So that was the first time where I was like, like, oh, wow, okay. Outside of this one drink that I got, I was able to test and try. And I really felt

Starting point is 00:03:14 like a bit of a part of a community at that one specific location, which was kind of interesting. Did it have a playground like McDonald's? To be honest, it felt like it too, because they have this huge, like, rotating, like, helix-form staircase thing. There's, like, different sections for different things. So the first four, you come in and you get to, like, see and try things. and it's like different experiences per level. So it felt like an adult playground, and I'm pretty sure when I was there, there were a few kids running around.

Starting point is 00:03:46 Oh, let's table that. Maybe that's part of our fix somewhere. Well, let's talk about Starbucks because they are at a bit of a crossroads. Maybe you'd call it an identity crisis. I won't go too deep into the history because we all know Starbucks, but it all started in 1971.

Starting point is 00:04:01 Jerry Baldwin, Zev Siegel, and Gordon Boker at Seattle's Pike Place Market, which we mentioned, and that's a fun visit if you ever get out there. maybe a touristy, but, you know, it's still fun to go around to all the merchants and stalls and things there. And Starbucks number one, started as a coffee bean wholesaler, became a coffee house in 1987. When Howard Schultz joined the company, anyone who knows Starbucks history knows that name, is inspired by Italy's coffee culture.

Starting point is 00:04:25 Starbucks crossed over to do a big time jump, but crossed over into Japan in 96, Europe in 1998, and China in 1999. And by the time Howard Schultz stepped down to CEO in, in 2022. There are over 35,000 stores in 80 countries. And the Starbucks logo is a two-tailed siren. It's not a mermaid. Did you know that? No. That's what web research will get you. Yeah, it's a siren. The brand expert, Aaron. Just boring this with us. Anyone ever calls it a mermaid, you have the right to correct them. Okay. All right. So we're here to fix Starbucks because they're making a lot of changes at once. Some maybe head spinning when you look at the

Starting point is 00:05:07 all together, and some seem like they're making the company and it's culture friendlier, and some have loyal customers scratching their heads. So a few examples, and then we'll get into it. Starbucks gave free coffee to everyone who claimed it the day after the big game recently through the app, and that's friendly. But also from now on, you have to make a purchase if you want to spend time there and use the Wi-Fi or restroom, so not as friendly. They've stopped charging extra for non-dairy milk, which seems considerate of their customers who might have dietary preferences or restrictions, but they're cutting 30% of their menu offerings, and they've reduced the number of items that customers can order at once through the app, which is maybe a little bit

Starting point is 00:05:44 discouraging for offices or customers that would want to place bigger orders. And there's some talk about efficiency there in-store versus the online in how to figure that stuff out, which we'll get into. They started writing names and messages on cups for that personalized touch, which baristas feel I'm not going to speak for them, but there's been a lot of push-back. online about that. And with that personal touch, a lot of stores are removing seating altogether, so you don't get too comfortable. And it's more of a walk-up experience. And it keeps getting more complicated from there. So every step that they're taking to make people feel more welcome,

Starting point is 00:06:17 it seems like there's a move in the other direction. And Melissa and Chino, what have you heard? What do you think is going on there? Well, I think that from a business perspective, you're right. They are at a crossroads. And so they really have to balance how they can become and continue to be profitable and grow. And also, there's a lot of competition these days. I think also the experience has changed and evolved over time. So I remember this is actually very funny. You know, four jobs ago, I ran a call center and we had a break room that was really harsh. It felt like a hospital cafeteria like overhead lighting and white tile floors and all this stuff. And when we went to go remodel it, I said, I want it to feel like Starbucks. So loungey, you know,

Starting point is 00:07:02 little quiet spaces and corners for people to kind of gather and have it be very warm and intimate. And it's interesting what you said, Erin, because recently I went into a pretty active large Starbucks near me, but I noticed that it's usually drive-through, right? It's right off the freeway. It's like on the way to the mountains. It's like, I'm sure moms and dads are like, let's get some hot chocolate for the kids. maybe they'll shut up for three hours, whatever. But it's a very large space. And so when I went in, I actually went in to go grab something because I had reordered online. And the space felt very stark.

Starting point is 00:07:42 And there were like no tables in the middle. It was just like this one long bar table, but nobody was sitting at it. And then like a couple people, there were like three people there. And so I wonder how Starbucks can kind of regain its mojo. and I think that there's also a lot of other things that play into this. And so, Chino, I'm really excited to talk to you about this because I was told when I went to go pick up this thing, a coffee for a bunch of people by my daughters, mom, we're not, we're protesting Starbucks.

Starting point is 00:08:17 And I said, what? And she's like, you cannot go to Starbucks anymore. And I'm like, I have so many rewards. I was like, what do you mean? I can't go to Starbucks. I mean my hot chai latte, you know, da-da-da-da. And they're like, no, no, we're not going there because of the Palestine issue. And I said, really?

Starting point is 00:08:34 And so, again, I think in today's world of social media, polarization, of politics and everything going on in the world, it's just one of those things. I know Starbucks is struggling with the labor unions and things like that. But from a culture perspective, I had no idea that this was going on. And I asked my daughter yesterday, I said, are we still boycotting Starbucks because I really need my Starbucks? And she's like, yes, we just want an apology. Like if they just apologized, then we would be like that, you know, they weren't picking sides or that they were going to help by giving money to both sides, whatever they were going to do, right? But they said, they haven't done anything.

Starting point is 00:09:19 And she said, it's funny that you said that because as a social media influencer, or she said there are a lot of very famous people that are having to hide their Starbucks addiction because they don't want to be caught up in that. So, you know, Chino, like there's this business decision, but the culture issue and the communications and all of this plays into it and then taking care of your baristas and the labor union. So this is complicated. What are your thoughts? Oh, it is very complicated to save the least.

Starting point is 00:09:54 because I think as we were talking in there, and you really brought it up so eloquently, they're having an identity crisis right now, right? Are they focusing on the customer? Are we taking away from the customer? Are we like a drive-thru? Like, we don't know. And I think a solution for me is similar to what you're talking about.

Starting point is 00:10:13 So the closest Starbucks to me is a drive-thru. When I used to go into work in an office, thank you for remote work. I just go and pick it up on my own during my lunch hour, but I would frequently go once I discover this one drink on my way and there were so many rewards, so many points. And I was almost gamified to like continue to shop there. And in my mind, I was doing what, you know, Dengen's called Girl Math. I'm like, well, you know, if I spend X amount of dollars, I get one free one.

Starting point is 00:10:44 And so it was fun. And it was like my little morning ritual. But like you shared, I think I was going on a walk with my friends. sorry to my friends, it was a 50 minute walk. It should have been a 20 minute walk. But we stopped by the Starbucks when it was the first time that I didn't go through the drive-thru. And like you said, it was such a stark difference to the Starbucks I remembered like in high school when like we would go and kind of hang out and have a drink there where it was really cold. I didn't know where to go.

Starting point is 00:11:13 It was mostly standing room. There was like chair or two. And it was, you know, a weird mix because it felt really stale. however, the people were always lovely, right? You know, I would always have the same person who, if I had my dog beside me, would remember to bring me a puppuccino or like, if I didn't, she'd be like, oh, for your dog when you get home, like, just take the puppuccino, who cares? And so I kind of built that rapport with this, with the morning staff on my way to work.

Starting point is 00:11:42 Obviously, when the protest happened and what kind of the backstory about this is, and it's a little controversial because they didn't, there's a few, ways so you can think about it. They didn't outward these. Like they stood for Israel and people, there was backlash there. And as you said, Melissa, they haven't really kind of shared about it. I do think that they

Starting point is 00:12:04 shared they were going to donate a little piece of, you know, some profits there to Gaza, you know, which I'd hope. But it hasn't really been talked about. I was almost swept under the rug. And so I remember going on this walk with friends, and this was like the first day of kind of the big Starbucks

Starting point is 00:12:20 protest. And you know, I have a friend that's Palestinian and we were walking and I was like, I just didn't even think about it because I was like, it's the only coffee shop we're going on this walk. It's the middle of fall in Toronto. And I realized I was like, oh no, this is not a good luck, right? And so I have stopped going to Starbucks, to be frank, in support of the protest. And it was hard because, you know, some people would give Starbucks gift cards and

Starting point is 00:12:51 you know, I just didn't want to be, you know, I really do. There's a, I live in Toronto. There's a strong Palestinian community here. Again, it's a very complicated issue and topic. And, you know, obviously no human life should be taken. Like, that's the truth. But, you know, there's a genocide happening in front of our eyes. History is repeating itself in a really horrible way. And we can't like past that. And so for me, I have stopped going to Starbucks altogether because of the protest. That said, they have in more recent times shared that they're doing things to support Gaza, which is great. So I did get a gift card instead of returning it or like going through that complicated matter. I said, okay, this $25. I'll use it. I think at the time, proceeds were going

Starting point is 00:13:45 to something. So that's fine. So it's a really weird time. Because as much as there's been protests and as much as their stock went down during the height of it, it's gone back up. Right. There's been a new CEO and Nicole's who's come in and where they're trying to figure it out. And right now they are actually, their stock is moving back up. And people are now in lieu of kind of this controversy, you know, becoming a little bit more of a thing of the past in terms of the protest against Starbucks. people are shopping more, but we just don't know how to shop what that looks like. In my opinion, I do think that Starbucks needs to tailor their location, right?

Starting point is 00:14:31 So if it's a drive-through, make it a drive-thru. But there still needs to be spaces where Starbucks used to build community. And I think there's a big piece of that where they had individualized boards. And like if I were to go to Victoria, BC, their Starbucks is so community. community driven. It's a lot of students, a lot of different people. We're versus Toronto in the middle of Bay Street, which is our financial district. It's in and out, right? You're going in and out. You're not really having meetings there. So I think it's complicated, but let's try to fix it. What do you think,

Starting point is 00:15:08 Aaron, from a brand perspective, they can do or like where you think they should sway? Well, I think it's an interesting move if you have a boycott or any kind of pushback, you know, on that big of a level. For whatever reason, that's an interesting move to say, come get free coffee, you know? And I give it back to you, Chino, you know, how does that look? And is that the right move to say, look, this is complicated.

Starting point is 00:15:33 We're trying or whatever the underlying message behind that is. But it's saying, come back, come back to us, right? Is that the right move? And I'd ask you, Chena, and then we can come back to some of the marketing aspects of it. I would say it is. a brand, you know, you need to bring people back. And I think to say, hey, I'm not going to give your discount. I'm going to maybe apologize by saying, hey, we messed up. Here's a free coffee. But they're not cheap, right? Starbucks is not a cheap coffee place. I do think it's a move

Starting point is 00:16:03 towards the right direction for the people who feel slighted in a way. That's not going to change things for some people, but it can help bring sort of people back. And it has. It has. That tactic has worked. And we've seen it before with McDonald's, right, with their dollar drink menu. And they slowly became the go-to drive-thru coffee place because they would have the summer marketing program that really took off. And now McDonald's, especially in Canada, where Tim Hortons used to be the number one, McDonald's became a competitor. And if not, has succeeded Tim Hortons, because they were essentially giving away free coffee to entice people to come. And so I think from a marketing perspective, from a corporation perspective, that was a good move

Starting point is 00:16:54 because as you can see in the numbers now, their stock has come up. I think that you bring up a good point too is like what are their competitors doing. I love what you've said about the cancel culture. I mean, problem with cancel culture is really there's no room for people to come back can have a moment of growth or a moment of insight, which is what we're saying would happen, we would hope would happen with Starbucks and others. You know, there's plenty of others. But I think that with the competitors, you're seeing also something that Starbucks really

Starting point is 00:17:26 needs to keep their eye on. And Aaron, this will be something for you to discuss in terms of like how, you know, they're already the largest brand. Like when you say, I'm going to Starbucks, nobody cares. They know you're getting a drink, but they don't care what kind of drink is. But anyway, you know, because you've got Duncan now coming in really hot and really strong, right, focusing on speed, affordability, convenience, drive-thrues, mobile ordering. They're, you know, they're trying to be the hit, modern, kind of fun, you know, place. McDonald's, like you said, McCathes leveraging that massive scale. They already have customers coming. They have moms, dads, buying happy meals for kids, getting their own coffee fix, right? So very focused on that value conscience. that you were talking about, right? And local coffee shops, though, I think, are probably some of the big and these specialty

Starting point is 00:18:16 coffee shops, like Blue Bottle, like in Denver, we have Huckleberry. You know, like there's these really kind of amazing localized experiences, Chino, that you mentioned. And I feel like consumers today want to help small businesses. They want to help people that they have a relationship with or view that they have a relationship, Right. So independent cafes are thriving and they're creating these really unique kind of neighborhood feels. It's a neighborhood, you know, it's just so hyper-localized kind of feeling. And I feel like the word of mouth in these neighborhoods too, Aaron, is almost stronger than just like that Starbucks brand, right? Yeah. And so like, you know, when you think about the competitors and what's going on in the marketplace, you know, Starbucks is going to have to think about that. I'm sure. Well, and it's interesting because that that was my awareness of coffee culture before Starbucks became ubiquitous, right? Like coffee was either something, at least the age that I was,

Starting point is 00:19:19 you know, you could take it or leave it with a meal at the end of a meal. You know, it costs a dollar. And, you know, do you want coffee? Or you go to a coffee house and you have an, there's an environment there. Thank goodness they had all ages shows when I was growing up. And, you know, You spent a good amount of time there, and that was coffee culture to me, these independent only in your neighborhood type of feel places. So Starbucks kind of took that, again, inspired by the Italian coffee house scene in culture, but became that name where you maybe had a neighborhood touch, but you knew what you were getting from Starbucks in Des Moines or Starbucks in Anchorage or, you know,

Starting point is 00:20:04 California, you kind of knew what you were getting from a brand perspective. So it's it, it is that challenge. Do they, is it authentic in trying to reclaim those roots and say, we are Starbucks coffee, you know, coffee house coffee company, come back and enjoy it or, but that what I'm struggling with is that at the same time, it's that efficiency pushback and let's get you in faster and let's not hold up the line with online orders and, you know, all those things. It's, it's that push pull dynamic that I'm fascinated about. Yeah, and you know, I think it's the simplification of life in general. And so the simplification of that menu, I mean, I laugh all the time about all the means.

Starting point is 00:20:45 I actually posted to, there's a website of like where, or a place that you can post where Starbucks writes your name down wrong and like all the weird names that they put down, right? And so I think it's interesting because people now have crafted these drinks to like, I mean, I can't repeat some of the drink names that like my daughter want, you know, I'm like, dude, that's not on the list. And they're like, oh, no, that's on the secret menu. And I'm like, dude, I'm not ordering that, you know. It's like 15 different things, right? And then it's like, oh, and then I ice, light ice, no.

Starting point is 00:21:22 And then, you know, add two shots of this. That's a dirty one. And I'm like, what? I don't understand. But there's this whole, you know, there's this whole culture around that that has that they have helped to start, right? So now people think every coffee shop you go into, I mean, I just was a fancy one here in Denver this week. And it was interesting because like people are just ordering things. I'm like, I only see five things on the menu. And like people are ordering these like

Starting point is 00:21:51 elaborate type of drinks, which they're they're getting customized. So, you know, to your point, Erin, going back to being like Starbucks the coffee shop and I love their ads where it's just like pure coffee, it's going to be hard because people, that's not what their customer base is anymore. We're all the like, oh, add the sprinkles, add the whipped cream, you know, add the oatmeal, you know, la, la, la, la, and only three ice cubes, not four, you know, all the things that we ask for. It's going to be interesting for them because I think that's what's also driving, I wouldn't call it waste, but there's, you know, collateral damage to your profits when you have to, when you're not really just selling a $3 cup of coffee, right?

Starting point is 00:22:38 Or $350, you know, I know it's not that low, but $4, $5 latte, you know, that kind of thing. You know, it's all these other things that are in our parts of it. So it'll be interesting to see how their product team, you know, figures out how to simplify because they've added so many things. And then they've added all the components with the food and with the other drinks that aren't coffee drinks, right? And I, you know, that's one of those things that like when I, I get overwhelmed when you get there and like people are ordering all these things. And I'm just like, yeah, I just want to vent it. And they're like, really? Like whole milk? Like,

Starting point is 00:23:17 you're okay with that? Well, and it's interesting because this, you know, with the regime of the new CEO, Brian Nicol who took over Nicole, Nicole, took over in 2024, this back to basics approach. I wonder how much they listen to the loyalist community. Are these decisions impacted by that? Because there was this manifesto kind of video that was called the

Starting point is 00:23:41 path forward and some of the surrounding materials on that. And he basically said they've overextended themselves for loyal loyalists of the brand, right, with the rewards programs and discounts and instead of focusing on purely the loyal customer and now it's a focus on all customers.

Starting point is 00:23:58 So, which is, you know, from a brand perspective, is great. You're, you know, everyone's welcome. But if you lose sight of who are those, the power users, you know, regardless of what the company, but who cares the most, you got to keep them on board if you're going to reach out to everyone. So, and I wonder, it's, you know, with this back to basics approach, are they saying you, you no longer have a EIPA status here? And what does that mean for the, you know, for those that have, the writer dies, right, that have been there this whole time?

Starting point is 00:24:27 Yeah. wonder if there is something about that hybrid approach to it, right? Like that we talked about with Barnes & Noble too when we were talking about Party City and all these where, you know, the big retailer, the big companies like Starbucks that have stores every other block, like what kind of ability does the manager of that group have in order to manage it like their own small business? I don't know if that would help. I think it actually might not help.

Starting point is 00:24:59 But I'm just wondering because to your point, Aaron, I know that one of the reasons I love the Starbucks I go to, it's the kids that work there are all from the high school. They're awesome. And they're so that I don't know why they're all so happy, but they all are. Maybe they drink a lot while they're there. But it's just really, I like that interaction.

Starting point is 00:25:22 And so, you know, Chino, I mean, with the culture that they built, how are they going to be able to go back to like this back to basics and simplify? Yeah. And my question is, can they do both? And I think they need to look at that because you're loyalists, right?

Starting point is 00:25:38 The people who are going to Starbucks, I'm not going to, if I'm choosing to go to Starbucks, I'm not going to my local shop because my local shop can only provide me five or six option. I like that I can customize and, you know, add a lot to add this.

Starting point is 00:25:53 I'd like that. And that's the bulk of their loyal customer base. And so to get rid of that, again, if that's the people who are shopping here the most and you're upsetting that apple card, that's going to be a problem. So there's a need to kind of have that. I do agree that, you know, there's Starbucks to go. There's a lot of things on their menu. Please don't get rid of your birthday cake pop Starbucks.

Starting point is 00:26:17 If anyone's listening, I love that. It's easy. Don't get rid of that. But if you can shorten that menu a little bit down, or I know they have seasonal things where you're kind of pointing to things at a certain time so that you still have that option, but at a seasonal base, so it's better for the people working there and it's more manageable. I think that's another really great route. I think looking also, you know, you have 35,000 stores, as you mentioned, Aaron, that's a lot. Every store is a little different. Location matters.

Starting point is 00:26:50 And so again, the drive-thru that I go that I used to go to, and I still do when it's, I have a little free something, you know, I have bought a Starbucks since then because, again, I don't believe in cancel culture for 100%, like give people the opportunity to change. They have in my eyes in a way. Do I want to see more? Yes. Do I miss my Starbucks venti? Yes.

Starting point is 00:27:15 Is my wallet? No. That's another story. But the drive-thew that I would. go to was right on the highway, was right into downtown. It's the bloodline. It's there. It's a lot of drive-through. That's kind of the purpose of this Starbucks. However, if you're going to, there's some Starbucks embedded in bookstores, Indigo in Canada, for example, that's a different experience. Picking up a Starbucks and like, you know, perusing different books that you might

Starting point is 00:27:44 want to be purchasing. You know, it's a whole different environment. There's other Starbucks that are like standalone Starbucks in different centers or closer to community centers, right? I'm expecting a different experience when I'm there. I'm expecting more of that community-led. And so I wonder, do they delineate what their different spaces look like, where you have the quick and dirty and you have the community base? So that way you're doing both, but you're really streamlining the efficiency for each thing. I would propose that they would do that because you do need to be able to cater to both sides.

Starting point is 00:28:25 And I think it doesn't need to be throughout every location. So, you know, can you do that? And that way, from a culture perspective for the employees, if I know I'm working at like a quick and dirty, you know, drive through one, that's great. Maybe you hire specific people for that that are used to kind of that quick service, QSR, kind of get people in and out. It's mostly online orders. And so that you also don't feel the need to show up at every single interaction, like super bubbly all the time. Like you still have that customer experience phase, but it doesn't need to be a personalized note because that's going to take some time.

Starting point is 00:29:06 You need your drink, get on the highway and go. Where if I'm walking into. a space, like again, when I went to Victoria, BC, it's the West Coast, it's on an island, it's not in the middle of the city, things are slower. Walking into that, they had community boards. Hey, there's going to be a local market on Sunday. Make sure you show up. There was somebody playing music there. People came and were sitting and were having their coffee there. Some people were working while they were there. And so having kind of the opportunities for both would be really great. And from a culture perspective, those people can really be them, their authentic selves and know

Starting point is 00:29:46 that I can really show up at this location and I can, you know, be that community and, hey, I know Melissa and Aaron by their name. And they come all the time here on a Sunday with their kids and they have a dog in the back. So let me go get that puppuccino for them as well. I think that would be the best course of action for Starbucks, especially in the middle of this. And at worst, they can kind of pick between the two and see what works best. And if they have to pick and choose between one, then they have kind of the data to do it. But for right now, I really think at the beginning stages, having an option for both is important because that is what their customer base is, the quick and dirty and the community.

Starting point is 00:30:27 That really isn't just about sales. So you've really outlined that beautifully. It's not creating a seamless, enjoyable experience that keeps customers coming back. So loyalty is what's really important. And they have a very strong loyalty program. So their loyalty program actually grew 32.6 million active members in 2023. So that's a 15% year-over-year improvement indicating they have always had really strong employee, I mean, customer engagement.

Starting point is 00:31:01 And so I love what you're saying because based on where you are, they could use the because they already have the data, right? So look at the average ticket size, right? So like, what are people ordering? What's the highest, you know, what are, what's the favorite breakfast item, right? Like maybe nobody's getting that banana nut bread, but everybody's getting the, you know, breakfast burrito or whatever it is, right, breakfast sandwich. So they understand that and can kind of curate their menu towards that. I loved also what you said about location because I think that it's different to have a Starbucks near a hospital, for example, right? So you've got people coming in. And so maybe you craft the space so that people have privacy so that they can get on

Starting point is 00:31:47 their laptop so they can get on the phone so that they can call family members and they can sit down in peace for a little while and have a sandwich and a coffee, right? Versus like at the airport, right? It's just like people are just trying to get their coffee and get on their flight. So like, you know, they don't need all the other stuff. They need the water, the pre-made packaged food, move forward, right? You know, like, I'm always kind of surprised that they still do in the airports all the food things when it should just really be grab and go and order your coffee because people are still going to order the 15-page coffee, right?

Starting point is 00:32:23 You know, so, like, that's what they should be focused on. But again, I love that idea of that the sales can help be your key insights of how. how you go forward with it. And then, you know, as your, as your teams or your strategy is to model that path forward, Aaron, that you talked about, where it's focused on the coffee house, focused on coffee. Think about scaling back and how would you do that in a way that would be, you know, gamify it, you know, see if it's like, you know, if they said, you know, we're going to get rid of these drinks. You know, they're not coming back until next year during the fall. you know, all of a sudden people are, you know, that's what McDonald's did with the shake and the McRibb.

Starting point is 00:33:08 Right? You know, Starbucks does that with pumpkin spice, right? Mm-hmm. Which I still don't understand that. But, okay. But, you know, those are the kinds of things that can get you increased sales and also don't have to, like, really damage, you know, all of the inventory and all of the work that you have to do for that. So I do feel like you've brought up a really good point about utilizing. your data that you have. And then also localization, again, it's understanding where are you and

Starting point is 00:33:40 what what are you doing? And I think that Aaron, they're starting this in the United States, right? Didn't you say that they're starting to? The focus. Yeah. The focus is, let's get the states right and then translate that out to other countries. Which will be interesting because the culture in other countries. And so I think is China their second largest? Like, may not be the same thing that they that they want. So I'm not sure that maybe this whole shift will translate as well, but I think they definitely will have time to build upon their key learnings here. Yeah. We'll have to see how that plays out. And Chino, I think you nailed it. You know, when it comes to the loyalty users, it got me thinking there's two types of loyalists, right?

Starting point is 00:34:24 There's the habitual, the parent, let's call it a parent with a car full of kids, every day drives through, it goes for efficiency, and spends $50, right? And then you have the loyalists, I think, in my old neighborhood, there was old men playing chess out front, spent six hours there, maybe spent $6 over the course of that time. And you have teenagers that are there for even making permanent memories. They're loyalists too. They spend $7, right? So between the two, if you go toward that efficiency model and you go toward that come, you know, coffee house, spend your time here, I guess Melissa, can one support the other when you look at same store, you know, store by store comparison sales and the data?

Starting point is 00:35:10 Can you be both. Yeah. And I think the data is really like, like I say, making decisions on your operations from a data driven perspective. So like, you know when you're, you know, this is like call centers, right? It's the same kind of idea here is that you know when your calls are going to come in, right? Monday morning at 8 o'clock, right? So for Starbucks, you know, we're busy from 7.30 in the morning until 10th, right? Because that's our first big push.

Starting point is 00:35:41 So at that point, and they know it's going to be the drive-through, kids going to school, people going to work, whatever, whatever. That's when they need to have people in that are maybe not necessarily customer-facing, but the brieces that are actually making the drinks. I'm always surprised when you go to a Starbucks and they're the person who takes your order and then they go make your drink and you're like, geez, like, please, like what I'm doing, right? And so maybe that's what they need to use the data for is to determine how to be most efficient. And then knowing that like, oh, in the afternoon, we have kind of casual people coming in, that we have the chess players coming in. We have, you know, nannies coming in with kids and da-da-da-da-da. So then that kind of gives them that safe time to say, okay, that should be the time that we're, we have the time that we're we're actually doing any training, any inventory, any cleaning, like, you know, but we can keep

Starting point is 00:36:28 that experience up because we all know that Aaron's coming in with his dad and they're going to be playing chess. And we know that they love the pumpkin bread and they know that they're going to want a hot tea, right? So they can do those kinds of things. It's, again, utilizing that data. And I think driving more on the loyalty side with the app and the program, I mean, Aaron, you mentioned that like not allowing people to use the bath. anymore. Well, you could use a digital key on the app, right? I mean, I know that's not a great experience for everybody, but like, you know, if you're going to Starbucks and you're not using your app and you're not getting points for free copy, I don't know what you're doing,

Starting point is 00:37:09 but, you know, that's the thing is that you could have, I mean, it's going to be an investment because you'd have to put those fricking locks in all the bathrooms. But, you know, you know, and also make it seem like, you know, we're doing this for you. We were protecting you. I mean, I know that in San Francisco there were a lot of issues with bathrooms and what people were doing in the bathrooms. And so, you know, I think people understand that there has to be something. I mean, you can't keep a bathroom clean. You can't keep, you know, people out of the bathroom.

Starting point is 00:37:42 You're trying to keep it for use of patrons. So I don't think that would be as big of an issue as, you know, just the accessibility. and making it as convenient as possible. So, like, having a digital key on your phone, I would think would be a great thing to do, too. Okay. We're getting our bell. I'm going to throw a fix at you.

Starting point is 00:38:04 Let's see what you think. So because you want to keep your loyalists happy. You want to open up your loyalty program, or at least the feeling of that loyalty experience to all guests. And we're deciding that you need an efficiency model. And you also, if you're going to be a coffee house, You need a community model where it feels like you're stepping into a neighbor and environment. So my proposed fix is you come up with two flavors of Starbucks locations, right?

Starting point is 00:38:36 One is a Starbucks Express. You get in, get out, and one is a Starbucks lounge. And you're there to hang out. You're going to spend some time there. You're going to try new menu items. You're going to do the maybe the coffee flights or they introduce, you know, they've experimented with wine in the past or things like that. but you're there for a neighborhood lounge experience. And we've said maybe the business model can substantiate both,

Starting point is 00:38:59 even though your efficiency model is going to propel the majority of the revenue, potentially between the two. We'd have to look, but or try it out or see how you optimize revenue at the lounges if you keep people there for a while and they've already finished their coffee. But then you're appealing to both mindsets. And I think maybe, you know, you know what you're getting when you walk into an express, You're not going to dilly-dally. And if you're in a lounge, you're there to enjoy.

Starting point is 00:39:27 So what do you think about that fix? I love that idea because it's a really great way to think about the hybrid model. And it actually addresses the needs of customers today. I also think that you could customize the loyalty program based on that model you just suggested. So like if you're just doing a drop in and grab a coffee to go, you're getting the basic points. But if you're actually participating in an experience or going to a place and, you know, and I hate to say this, but data tracking or whatever, they're tracking, you know, tracking what you're getting when you add additional items like food, et cetera, et cetera, maybe you get a little bonus, you know, that kind of thing. And so, again, you know, driving the right types of experiences based on the data that they have, you know, should would showcase and also what they're seeing from their competitors, like we were saying, you know, the, you know, the. the convenience of it all. I love that idea around the Starbucks Express because definitely like

Starting point is 00:40:28 in airports, that's what it should be for 100%. Gino. Agreed. And, you know, taking it even a step further, gamifying the actions you want to see. So if you are going to a Starbucks express at an airport, and if you only get a coffee, a black coffee, maybe it's two times the points versus, you know, the really complicated order so that you can push people or there's more during. kind of that, I love the like segregation among the time. So, you know, that morning shift of people, maybe there's more points if you have a less complicated order. And then in the middle, okay, if you're also ordering food with your coffee to like kind of extend that kind of time that people are going to be taking more time there, opportunities to do that as well. So I think Starbucks has the data. They

Starting point is 00:41:17 have the infrastructure to kind of keep all of this. We all have the Starbucks app on our phone. you know, the birthday specials, I, you know, I will always have that just to go get my free birthday drink. And I know it's always going to be something crazy and different because it's, it's free. And I think they've done a really good job of kind of switching the narrative and bringing people back. And so I do think the new CEO is doing really well. And I think if he can incorporate these, this hybrid model will really help at least inform kind of what the direction is versus this push and pull that is happening with Starbucks right now. I love that idea, too, Tuch, you know, because I think that you could even do self-service.

Starting point is 00:42:00 So, like, you know, Aaron, like when you talk about, like, high traffic areas, like a hospital, like an airport, like certain places like that, you could have copies ready to go with a QR code and say scan it and take it, right? Which would be great. You didn't have to wait in line because, I mean, like, seriously, at the airport, sometimes I'm like that line must be for Starbucks because the line is so long, right? You know, or for canceled plus. And so I love that idea of them saying like, these are our top five drinks.

Starting point is 00:42:30 We have them ready, a big sign right there. And it says scan it, QR, take one, right? And then maybe to your point, you know, you get double the points because you haven't had to, like, they haven't had to deal with, you know, talking to somebody and waiting in line and getting it customized. I think that's a really great idea. Yeah, you could do that. You can even do my top five, you know, so if you have your personal top five already queued up and ready and you're choosing something you've ordered repeatedly in the past,

Starting point is 00:42:59 that's efficiency, right? Right. And loyalty, it builds loyalty. They can be, you know, upsell suggestions that you can get more points for. But if you're not standing at the counter deciding what you want, you're clearing the way for others to come through. That helps the experience on all sides. Yep.

Starting point is 00:43:16 And it drives sales, right? a drive a very high level of sale because we all know that even, you know, $2 for a cup of coffee is ridiculous. But we all paid for it. So we all love it. We all paid for it. Exactly. And I think, too, going back to, you know, the loyalty, if we can get people to download the app, even if it is to just scan to go to the bathroom because it's like the quick and easy thing to do in there all, I don't know, whoever's using it, that's bringing data there. it's adding that loyalty for that person to come back and, you know, pushing your promotions and they're more likely to buy.

Starting point is 00:43:54 And so I think, again, incentivizing people to do that. So you kind of gamify it from a corporation standpoint from a brand perspective is really great to build that brand loyalty, right? I remember, you know, years ago where I didn't have the Starbucks card and I would go every once in a while because it was close to the office I was in. And one of my colleagues was just like, why don't you have the app? And I'm like, it's too complicated. This is before every brand had an app. And now I realize all the points that I've missed. And now having that app and it telling me, hey, there's a, there's a promotion or, hey,

Starting point is 00:44:30 if you go on the express go, you're going to get three times the points versus one time. I'm more likely to go. And I have been, I have fallen prey. I've been a victim to the Starbucks loyalty card. And, you know, in this shoe, and I think, again, post this cancel culture, really going back to that community base right now from a brand perspective outside of just the dollars is going to be very important for them. Agreed. All right, Brian, it's your move. Lean into your loyalty program and expand it.

Starting point is 00:45:03 Gameify it. Get us in there. Casual Starbucks visitors and aficionados alike. Starbucks lounge versus Starbucks Express and separate your locations so you know what you're there for. And let's see what happens. You're a move, man. All right. That does it for us on this episode.

Starting point is 00:45:23 We are going to take our venty to pump half-cafs and get out of here. Thanks for tuning in. Do We Fixed It? You're welcome. Visit us at we fixed it. Pod.com. And we will see you next time. This podcast is produced by Straightforward Media Group, All Rights Reserved.

Starting point is 00:45:37 If you'd like to learn more about how a podcast can help your company assess. authority and generate leads please email us at Eric at straightforward m g.com or go to straightforwardmg.com for more information.

We Fixed It, You're Welcome - Balancing Act: Starbucks' Brand Dilemma

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