Can Starbucks Really Offer 'Value' With a Straight Face?
For over a decade, Starbucks wasn't just about good coffee: it was about luxury -- a self-indulgent treat -- which for many became a regular part of their daily routine. The Starbucks experience, with its granite counters and wood-paneled stores redolent of fresh brewed java, drew devotees happy to fork over $5 for a hand-pulled cup of the good stuff.
Once the company added free Wi-fi, Starbucks became a destination not only for commuters but for work-at-home entrepreneurial types. An office away from the home office, Starbucks was the perfect place to meet clients, network, and yes, linger over a latte. Sure, the prices were steep but what did that matter when, after talking shop with fellow java junkies, one could claim the expense as a tax deduction?
Then the economy began to shrink and suddenly people started paying attention to their daily expenses, including the latte factor: unnecessary costs which, if eliminated, could turn into thousands of dollars saved per year. In New York City, for example, buying a triple grande caramel macchiato four days a week amounts to $883.20 per year. My own former Starbucks habit of buying a venti latte at $3.60 five days a week amounts to $936.00 annually, enough to pay for the new kitchen floor I'd been unsuccessfully trying to save up for.
As the price of gas spiked last year and job losses mounted, more and more people began calculating their own latte factor and realized it was just too damn much to pay for a coffee drink. McDonald's quickly capitalized on this realization. For all the mommies in minivans brimming with kids hopped up on Happy Meals, the daily Starbucks indulgence was an ill-affordable luxury. But what if McDonald's offered them a similar treat -- a cappuccino or latte -- far below Starbucks prices? It was a perfectly timed move, and McDonald's same-store sales jumped. Seeing an opportunity to cash in, Dunkin' Donuts quickly followed suit and its profits also rose.
As the economy worsened, cups emblazoned with the green mermaid became a badge of shame. Who in their right mind would shell out $5 for coffee in a recession like this when, just around the corner, they could get caffeinated for a fraction of the price? Like junkies looking to maintain their habit, coffee consumers flocked to more affordable suppliers, and Starbucks felt the pinch.
Although previously so ubiquitous that one comedian joked about a new Starbucks opening near him -- within his local Starbucks -- the company began downsizing and cutting costs. Late last year, under pressure from conservation groups, Starbucks changed its policy that required stores to keep water constantly running to rinse the stirring spoons. Ending this practice, they said, was a "green" decision, but the reality is that it also saved them millions of dollars. Then Starbucks began laying off management employees, a move that would have been unthinkable during its time of rapid expansion. For the first time ever, Starbucks began contracting. It closed more than 600 stores in the second half of 2008. People who'd held a "Starbucks fantasy" of quitting their corporate jobs to become baristas realized it was just that that -- a fantasy. To continue shaving expenses, Starbucks announced it would stop brewing fresh decaf every 30 minutes after noon as part of its plan to shave $400 million in expenses.
Now Starbucks hopes to woo back budget-minded consumers by offering a "value meal" pairing breakfast foods with a coffee drink.
The $3.95 deal includes one of four hot sandwiches -- currently sold at half of Starbucks' U.S. locations -- and a tall, drip coffee. Also offered for that price is a tall latte and either a slice of cinnamon swirl coffee cake or a bowl of oatmeal.
At first, I greeted this news with joy. I could return to drinking Starbucks lattes and get a good deal! But, like a double shot of espresso, my excitement eventually wore off. Even assuming I'd be interested in a sugary, carb-loaded breakfast -- which I'm not -- how on earth am I supposed to eat oatmeal while driving the kiddies in my minivan? Wait, I'm not supposed to drive while eating it? Doesn't Starbucks get how busy life is these days?
Then there's the matter of timing. At McDonald's I can get a latte whenever I want, any time of day. Sure, it took quite a bit of time to get the clerks at my local McDonald's to realize that a plain ol' latte is not the same thing as a vanilla-flavored one, and that I really don't want them adding sugary syrup to mine. But they've learned, and I'm happier for it since now I don't have to make separate trips to McDonald's and Starbucks to satisfy all the occupants of my minivan.
But there's something else served up with that McDonald's McCafe latte, with its cup cleverly designed to look more upscale than the fast food chain's usual fare. It's proof that I, too, am contributing to our household's attempts to cut costs. Were I walking around with the green mermaid in my hand, I'd be practically announcing that I'm putting my personal habits ahead of our family's efforts to save money. That McDonald's cup, with its lower-priced contents, shows that I'm cutting back, too. Sure, I could save even more money by forgoing the java juice altogether, but that's not going to happen. Starbucks turned me into an addict, and now I'm bent on getting my fix. I'm willing to compromise and get the McDonald's latte if it means I can stay caffeinated.
And no sickly sweet cinnamon bun or oatmeal is going to convince me that an overpriced latte bearing Starbucks' green mermaid logo is a better savings than the green left in my wallet at the end of the day.