Catch a Falling Starbucks

After a fairly significant gap I saw a pair of articles in the news today that showed the contrasting fortunes of Starbucks and how the uncertainty of the current market was affecting the once dominant coffee giant. Not to hint that they aren't as popular as they once were but I think the market fluctuations are definitely having an impact these days. The first article I read was about how Starbucks was continuing to change up their traditional offerings by adding new items to the menu in the hopes of luring customers back.

One of the new items that is already quite popular in European and Asian outlets is their customiseable Hot Chocolate. Although some will argue that hot chocolate was already on the menu (the kid's menu... but the menu nonetheless) this will mark the first time the drink is being offered up premium style here in the states. To hear the execs at Starbucks tell it, they realized that chocolate products are still quite popular and so they would obviously want to capitalize on that popularity and offer up a premium chocolate drink. This comes in the wake of the shake up that began late last year when Starbucks began revamping their fledgling image. At one time hailed and revered as the bastion of premium coffee drinks, Starbucks had fallen prey to its own success and people weren't flocking to keep the stores operating as successfully as they once had.

I am personally of the opinion that the addition of other high priced items on the menu that aren't really related to coffee was hurting them. I remember walking in one time and seeing that in addition to the usual cakes and pastries there were now breakfast sandwiches and at lunch, regular sandwiches. Now although these are good ideas in theory, I don't think people are coming in to Starbucks with that type of food in mind and I'll tell you why. Check out the average person going in to Starbucks and they are either in their for a massive java fix or for something to sip on. I can literally count the times where I've seen someone go in and pick up a sandwich to eat. For the cost of what they were charging at Starbucks you could have gotten multiple sandwiches of similar size at McDonald's.

Granted McDonald's and Starbucks are in sort of the same but sort of different categories of food service but they offer up options nonetheless and when pocketbooks are getting tighter, no one wants to spend more on something that ultimately is an impulse item. Sure a cup of coffee is a wonderful pick me up in the morning but we are also cheap. Don't believe me? Next time you are in an office where coffee donations of a quarter are requested, check out how many pennies are in there. Some people toss in a penny to make the appropriate sound and get some coffee without paying for it. Do you really think someone that stingy is going to pay up for coffee under normal circumstances? I don't think so.

So after the market shakeup in the wake of the announcement that Congress didn't pass the proposed $700 Billion bank bailout, companies like Starbucks saw their stocks stumble lower than they had in a long time and a large part of the reason is that patronage is definitely down and the company has over-extended themselves to the point of going beyond the demand of society. I love my coffee and I enjoy an occasional cup from Starbucks but I don't mind standing and waiting for a few minutes. I don't need another Starbucks ten feet away to take care of my coffee lust if there are two people ahead of me in line.

This was the gist of the second Starbucks article I read. It seems that the company has continued to see losses in their stock value and although I firmly believe that the company is far from going under or instituting more store closings, they will likely consolidate their holdings and return to their core values which was providing good coffee products for a reasonable cost in a timely manner. That isn't a direct quote from their website or coprorate mantra but it was the attitude that I used to see when I first started going to Starbucks on a regular basis. These days such feelings are few and far between and it is possible that perhaps somewhere along the line, the mantra was left at the wayside. It's time they got it back.