Starbucks Case Study

Submitted By samihamad
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Starbucks case

Starbucks is a household name when it comes to coffee. It seems there’s one on every corner. In the early morning, practically the whole city commutes to work with a Starbucks coffee in hand. Why is Starbucks basically the only game in town? Some, including myself, would say it is because of their convenience and customer service. In the early 1990s, Starbucks really rocketed to the top. In the 1980s, Howard Schultz bought the company from the original founders. He had a vision of making Starbucks coffeehouses the “third place”, neither work nor home, but another place people could go to relax, socialize, study, work, et cetera. There wasn’t a place in American culture that really fit that niche. At the same time, Starbucks offered specialty coffees, in both bean form and in beverages. Again, there wasn’t a big coffee chain out there, especially on the level Starbucks was working towards and offering the products that Starbucks was offering. They slid into a big demand and filled it well. The value proposition was that of “live coffee,” where the experience of the customer was the center of their operations. First, the coffee was of the highest-quality. Second, the customer service, or intimacy, was fine-tuned to create an “uplifting experience” where the baristas would be friendly, competent, quick, and remember regular customers. Third, the atmosphere was created to entice people to stay and encourage a sense of community. Convenience was key, locating the stores in high-traffic, high-visibility areas. The brand image Starbucks developed in this time was that of a premium coffeehouse catering to affluent, well-educated, and white-collar patrons, mostly female, aged 25 to 44. Starbucks in 2002 was the established dominant specialty-coffee brand in North America. They had 20 million customers in over 5,000 stores around the world and were opening 3 new stores a day. Unfortunately, their customer service fell by the wayside during their focus on expansion. Customers in 1992 were more satisfied than customers in 2002. Starbucks in 2002 was cited as being too focused on making money and expanding their stores as opposed to creating a place that invited people to linger with a cozy atmosphere and friendly staff. Another common complaint was that the speed of service was too slow.
However, besides the speed of service, the other complaints aren’t necessarily bad. Starbucks is no longer the small shop on the corner. It’s become a large multi-national corporation. To imagine otherwise is foolish. So perhaps not creating a place for the community to linger and socialize isn’t such a bad thing. If the community is still getting the product they love and expect in the time they want by friendly and happy employees, that is success.
I believe that Starbucks should make the $40 million investment for increased labor hours in the stores, boiling down to 20 extra hours of labor per week per store. The goal is to cut service time down to 3 minutes in all of the stores, regardless of the time of day. The shorter the wait time for drinks, the more customers they can serve, which would increase sales and make back the money invested in labor. On top of that, employees who aren’t over-worked and slammed by demand are
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