The merchandise, more art than science, is far removed from being the merchant that I believe we can beĪnd certainly at a minimum should support the foundation of our coffee heritage. You certainly can't get the message from being in our stores. In fact, I am not sure people today even know we are roasting coffee. Some people even call our stores sterile, cookie cutter, no longer reflecting the passion our partners feel about our coffee. the warm feeling of a neighborhood store. However, one of the results has been stores that no longer have the soul of the past and reflect a chain of stores vs. Clearly we have had to streamline store design to gain efficiencies of scale and to make sure we had the ROI on sales to investment ratios that would satisfy the financial side of our business. We achieved fresh roasted bagged coffee, but at what cost? The loss of aroma - perhaps the most powerful non-verbal signal we had in our stores the loss of our people scooping fresh coffee from the bins and grinding it fresh in front of the customer, and once again stripping the store of tradition and our heritage? Then we moved to store design. Again, the right decision at the right time, and once again I believe we overlooked the cause and the affect of flavor lock in our stores. This, coupled with the need for fresh roasted coffee in every North America city and every international market, moved us toward the decision and the need for flavor locked packaging. This specific decision became even more damaging when the height of the machines, which are now in thousands of stores, blocked the visual sight line the customer previously had to watch the drink being made, and for the intimate experience with the barista. At the same time, we overlooked the fact that we would remove much of the romance and theatre that was in play with the use of the La Marzocca machines. For example, when we went to automatic espresso machines, we solved a major problem in terms of speed of service and efficiency. Many of these decisions were probably right at the time, and on their own merit would not have created the dilution of the experience but in this case, the sum is much greater and, unfortunately, much more damaging than the individual pieces. Over the past ten years, in order to achieve the growth, development, and scale necessary to go from less than 1,000 stores to 13,000 stores and beyond, we have had to make a series of decisions that, in retrospect, have lead to the watering down of the Starbucks experience, and, what some might call the commoditization of our brand. Subject: The Commoditization of the Starbucks ExperienceĪs you prepare for the FY 08 strategic planning process, I want to share some of my thoughts with you. Sent: Wednesday, Febru10:39 AM Pacific Standard TimeĬc: Anne Saunders Dave Pace Dorothy Kim Gerry Lopez Jim Alling Ken Lombard Martin Coles Michael Casey Michelle Gass Paula Boggs Sandra Taylor He tackles the problem of commoditization at scale head-on: The Oxford University Press published a memo sent by Starbucks CEO Howard Schultz to the executive team prior to a board meeting. This inevitably leads to a worse customer experience, and eventually brand, and eventually revenue. It’s remarkable.Īlthough mobile apps and loyalty programs certainly drive revenue, companies need to standardize and optimize to scale efficiently and save costs at the same time. This is worth more than all but the most epic Silicon Valley companies ever built. Starbucks ( SBUX 0.00 ) is up 9x since 2010, and is now worth a staggering $105 billion! Today, a number of businesses have leaned into similar web/mobile ordering efforts to bump sales and logistical efforts to streamline costs and standardize the customer experience at massive scale.Ĭhipotle ( CMG 0.00 ) is up 10x since 2010, and is now worth $38 billion. Arguably Domino’s stock is a better asset to hold given the real assets on its balance sheet and softer volatility. Investors often wish they had bought Bitcoin back in 2010. But the point remains: Dominos invested heavily in world-class logistics & IT infrastructure, drove online and mobile app sales before it was cool, and quietly scaled an empire. Of course it’s hard to compound at 2,000% when Amazon, Apple, Facebook, and Google were already worth far more than Dominos to begin with.
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