Starbucks: Shoot for the stars, earn a lot of bucks

Starbucks Coffee Company: A success story unprecedented. Out of Seattle, WA, grew the largest coffee shop chain the world has ever seen. Today it has more than 12.500 coffee shops in  the US. The  international expansion started with a shop in Tokyo in 1996.  In 2012 it has more than 17,000 stores in 55 countries. That’s 5000 more shops than Burger King and half of McDonald’s number; this is even more impressive knowing that most Starbucks shops are owned by it and not franchised (!). In these days, Norway gets its first Starbucks shop as it opens at Gardermoen Oslo Airport [1] (though, Starbucks coffee could have been bought in Norwegian retail markets since February 2011). These people sell coffee. Coffee! What kind of operational principles can turn such an every-day product into a billion dollar company?

The Starbucks Experience

To find out I just read “The Starbucks Experience” by Joseph Michelli [2] and stirred it with my own experiences from visiting Starbucks shops in the US, Europe and Japan. I am surprised to find out that my comprehension of the company is fundamentally different from Starbucks’ view on itself….

Mr Michelli is a Starbucks missionary. I wonder how much he got from Starbucks for writing such a biased declaration of love to a coffeehouse. This book should be read with a good coffee from a competing coffeehouse to keep you from the “Starbucks salvation” that has struck the author (a Nespresso, Lavazza, or Illy would do fine). That said, the learning points in the book is of genius – the five principles that Starbucks envisions to follow are  brilliant. They are:

  • Principle 1: Make it your own (Be welcoming, genuine, considerate, knowledgable, involved – be YOU)
  • Principle 2: Everything matters (Retail is detail. Quality first. Everyone is unique)
  • Principle 3: Surprise and delight (Exceed customer expectancies. Be unique and different)
  • Principle 4: Embrace resistance (Actively listen to criticism and act on it)
  • Principle 5: Leave your mark (Be the difference and give back to the local society)

Don’t pay attention to what the professor does, listen to what he says…

The book is filled to the rim with brief very-happy-ending anecdotes of how Starbucks “partners” or “baristas” (or employees as I prefer to call them) used the Starbucks operating principles to rescue people from suicide, bring customers their favourite drink while fighting deadly diseases, help local artists, win a million-dollar lottery but gladly sharing the prize, give free coffee to customers “who look like they need it”, organise free coffee shipments to the US troops in Afghanistan, and so on and so on. In their vision Starbucks deeply connects to their customers and serves the society at large with endlessly more than coffee. Reading all this, it puzzles me that my own experiences as a customer of Starbucks do not echo what they say. I see Starbucks slightly different:

Starbucks sells decent coffee, not the best and rather expensive, but in a nice and clean atmosphere. You know what you get, and as a bonus they offer free wi-fi. And yes, I admit; Starbucks’s Java Chip Frappucino and Iced Lemon Pound Cake are both dangerously delicious if not directly healthy… I like Starbucks – I don’t love it.

Iced Lemon Pound Cake teams up with a Latte Vanilla (c) better-operations.com

Potentials for better operations

To further improve their operations, I would like to suggest a new operating principle for Starbucks: Principle 6 should be “Make it flow“; develop and standardise a routine that works each time when processing orders. As Starbucks operate today, their front desk logistical operations could often be described as ” Barsucks”: For example, once I experienced an employee shouting at me from distance asking what I wanted, then the cash register asked the same question later on, before I waited much longer than I normally do, and finally got the wrong drink. Unfortunately it was not a one-off incident.  Opposite of what Michelli’s book preach; I don’t think they took any learning and action from this other than handing me the one I originally ordered. It was definitely not in accordance with their 5 principles… But if Michelli is right; Starbucks will pick this up and contact me to know more of what I think… I’ll keep you posted…

In conclusion

In my eyes, Starbucks is a great profit-earning company. Their products and service are not as brilliant as their missionaries claim, but they serve good coffee. They are probably ethically better than many, but definitely not perfect. Their five theoretical principles are ingeniuos and should be embraced by all service companies. Add the sixth one suggested here, and they are close to perfection; but do not forget to execute! Starbucks has been “shooting for the stars and landed on the moon”. And this successful strategy has taken the coffeehous farther ahead than any of their non-existing competitors.

Starbucks M Street, NW, Washington DC, (c) better-operations.com

References

  1. Joseph Michelli (2007) “he Starbucks Experience – 5 principles for turning orindary intro extraordinary”, McGrawHill

4 thoughts on “Starbucks: Shoot for the stars, earn a lot of bucks

  1. Agreed: the coffee quality is far from superior. Every single latte I had back in the days reminded me of dish-washing water and it took a few attempts to make it better at home with minimum effort.

    • Thnx for the comment David. I agree with you. The only sad thing though, is that it still is among the top-5% coffees to buy over here. Most other fast food / fast drink chains really serve dish-washing water as “coffee” I think… Don’t even try the Dunking Donut attempt. I see that Starbucks just opened at Gardermoen, so you can enjoy your latte there in the future.. 🙂

  2. “partners” or “baristas” (or employees as I prefer to call them) used the Starbucks operating principles to rescue people from suicide, bring customers their favourite drink while fighting deadly diseases, help local artists, win a million-dollar lottery but gladly sharing the prize, give free coffee to customers “who look like they need it”

    …all that while working on a minimum wage. While the company had problems with ‘partners’ in Germany who demanded better pay, they tried to hire in neighboring countries (Poland) to fill in the spots of striking workers. This is the part of business so few books explain.

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