By Morf Morford
Tacoma Daily Index
You might think that it is obvious that Starbucks is in the coffee business.
But if you think about it, it isn’t.
What set apart Starbucks a decade or two ago was NOT the coffee – you could buy coffee almost anywhere – but what Starbucks offered was something very different; a customer stepping into Starbucks at its best could experience three powerful sensations rare in our mass-production consumer economy; they could feel personally attended to, discern a craft in motion, and feel connected to something larger than themselves.
As with Starbucks, Apple and Tesla are proof that the masses don’t always gravitate to fast and cheap.
Starbucks, like other businesses offering food, drink or almost any service, are improvising with pick-up, drive-thru or delivery.
But it turns out that many Starbucks customers are not terribly interested in coffee – it was the “vibe,” the atmosphere and the sense of community.
Snacks, CDs and knick-knacks diluted that experience.
COVID-19 erased it entirely.
Coffee places, and almost certainly every other food or service provider, will be renegotiating their business plans and identity in the ever-shifting business and economic landscape.
The foundations of food service are basic; cost, quality and service.
Consumer preferences shift constantly. Are customers looking at “fast” food – and willing to sacrifice quality – especially if the price is good. Or are customers looking for quality, and willing to pay for it?
When Starbucks began, the average cup of coffee – at other places – was about fifty-cents. Starbucks charged about three dollars.
I have a friend, a big, burly, former boxer, Lakota Sioux from South Dakota who had moved to Seattle in the early 1990s.
He dropped by his local coffee shop, a Starbucks, and bought a cup of coffee. When he saw the bill – and the tiny cup – he said “What the……! If I’m gonna pay four dollars for a cup of coffee, it better be a huge, honkin’ cup of coffee!”
“Are you really sure?”
“Just give me the biggest cup you got!”
He couldn’t sleep for three days.
But he never forgot Starbucks.
People who bought coffee at Starbucks were not only buying coffee, they were buying an experience – maybe even a cultural sense of belonging. There is nothing more powerful – or irresistible.
Drive-thru, of any product, cannot offer that encounter, so it better be cheap.
As we all piece together our economy, our pace and yes, achieve something approaching “normal” we need to keep in mind that most, if not all, customers are seeking something much more than the items on the menu or marquee.
Starbucks is historically more sensitive to economic slowdowns than most other fast-casual dining chains. Starbucks sales dropped for eight straight quarters during the Great Recession — from the fourth quarter of 2007 to the third quarter of 2009. Faced with a financial choice, strapped coffee drinkers did not give up on their coffee habit, but traded down temporarily to less-expensive brands, like Dunkin’ Donuts and McDonalds. When the crisis was over, they returned to Starbucks in large numbers.
Howard Schultz’s vision of Starbucks was always different from its competition. Starbucks was not intended to be just another coffee place – it was to be a “third place” – after home and work where people would meet, chat, hold job interviews or even host wedding proposals.
People might meet at Dunkin’ Donuts or McDonalds, but most are not inclined to linger there.
Lingering is what most customers would do at Starbucks. It was an interesting departure from the usual business model.
McDonalds’ furniture, for example, mostly uncomfortable, molded, hard plastic is not designed to linger in.
Starbucks furniture, some of it at least, is comfortable and inviting. In those seemingly long-ago days before COVID-19, I often saw customers at Starbucks essentially “camped out” with newspapers, books or laptops at work, or leisure for hours. Some alone, some socializing, but the message could not be more clear, Starbucks was indeed a “third place.”
You don’t see that at Dunkin’ Donuts or McDonalds.
As businesses revise and adjust to the reforming economy, the dominant question will be what it always has been – what do customers want?
Do customers want safety first? Will customers be able, and willing to afford the quality products they had before?
Will price be the defining feature of most sales? Or will it be convenience?
To put it simply, when people go out for a meal or a cup of coffee, they are not just looking for food or drink.
They are looking for a place, a community and somewhere only a couple iterations away from home.
Howard Schultz’s insight was that customers would be customers for life if they could travel the world, but always find a place that felt like home.
Back when I was teaching, I often tried to get my students to use critical thinking in their everyday decision – especially spending versus saving.
That was back when almost every student had a bottle of water close by.
I used to tell my students that when people buy a bottle of water, they weren’t really buying water.
Most of my students would look at me blankly, perhaps with a “Huh? What else would they be buying?”
I would point down the hall where there was a pair of water fountains.
“Most people who buy a bottle of water aren’t really buying water, they’re buying convenience.”
Same with Starbucks. A premium price gets you far more than a carefully crafted cup of coffee, you get a community. A cup of coffee, at least ideally, was an introduction, almost a communion, a welcome into a fellowship.
There is a community of coffee drinkers now, mostly scattered. Starbucks is no longer the center of the caffeinated universe.
Many make their brew at home now, but the search for community and belonging goes on.
Any business, food oriented or not, if they want to thrive, needs to keep this first principle – of people seeking community over commodity – in mind.