Author(s): Arthur Kraft, John Kraft
Over three decades Starbucks introduced a wider variety of experiences. It served hot and cold drinks, whole-bean coffee, micro-ground instant coffee, espresso, café latte, full and loose-leaf teas, juices Frappuccino beverages, pastries, and snacks. Starbucks commanded substantial brand loyalty, market share, and company value. Its growth coincided with the growth of the specialty coffee industry but attracted significant competitors. Rapid expansion into coffee service and coffee away eroded Starbucks supply chain. Relentless versification and product differentiation eroded the earlier vision of a coffee house experience. The notion of creating a coffee house experience started slipping. To-go orders represented 80% of transactions in 2019. Customers placed one-fifth of orders through the mobile app. Cold beverages, inherently more portable than hot, outsold hot drinks. The communal nature of the cafés eroded, and with-it Starbucks’s brand identity. The chain long described itself as a “third place,” between work and home, where customers could lounge for hours. But the pandemic upended that hanging-out model. So too did the rise of mobile app pickup and drive-through orders that drastically reduced customers’ time in stores and increased expectations of quick service, putting more pressure on baristas. Even consumers’ evolving drink preferences led to changes. As customized frozen drinks, which required more intricate and labor-intensive preparation, grew in popularity, Starbucks retooled its stores to help its baristas. Starbucks offered coffee and Frappuccino with almost 50% discounts. Increased demand for the labor-intensive Frappuccino only heightened the stress on the already stressed baristas to meet the demand for these elaborate drinks. Starbucks became a focal point for resurgent unionization movement workers pressed for higher pay and better working conditions.