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How They Got the “Bucks” Back Into Starbucks

Posted on: January 20th, 2012 by Molly Setzer 1 Comment

You know how you always remember particularly good days in your life?

Well, one of the best days of my life was when a Starbucks opened on the corner near my house. Once a week, I’d treat myself to a decaf grande non-fat, no-whip, three pump mocha. This was in 2008, and I was pregnant (hence the decaf).

With a Starbucks seeming to pop up on every corner, it was just a matter of time before they faced 600 store closings and negative sales. However, today Starbucks has blasted past Wendy’s and Burger King to become the number three restaurant chain, posting $9.07 billion in domestic restaurant sales last year, up 8.7% from 2009.

What did Starbucks do to bring such a turnaround?

The first component was drastic cuts. No one likes to hear those words, but Starbucks closed more than 600 underperforming stores in 2008 and 300 stores in 2009. Additionally, Starbucks chose not to open as many new stores. Smart move. Ultimately, one thousand positions were eliminated as well as $600 million dollars in operating costs.

Massive cutbacks weren’t the only thing helping Starbucks rebound. The company also revamped their food menu, as Americans were changing their eating preferences and embracing the “value” breakfasts offered by competitors. (In Green Bay, Wisconsin, the food menu tends to be limited, so I imagine the drastic changes were more noticeable to customers in other parts of the country.)

Starbucks also retrained staff to get back the quality and consistency that was slipping through the cracks…which incidentally cut down on the number of times I sat down to enjoy a mocha, only to discover it was actually a white chocolate mocha. Ick. It might not sound like much of a difference, but it made me cringe.

Finally, Starbucks embraced some innovative products and services. For example, the 2009 instant coffee Via line exceeded Starbuck’s expectations. It certainly made me relived to find a packet of Via when there wasn’t time to brew a fresh pot of Starbucks in the morning! The line continues to be expanded and pull in huge profits. In fact, Starbucks has redoubled efforts to have all their packaged coffee in grocery and major chain stores. (Have you noticed the huge price hike in grocery stores lately?) Starbucks also expanded (and reinvented) their subsidiary company, Seattle’s Best Coffee. And how crazy would Starbucks be to pass up the opportunity to give Keurig a run for its money? In proper form, Starbucks announced plans to introduce a line of “single-cup brewing machines” for home use, definitely giving Keurig some stiff competition. Personally, I can’t wait! Perfect gift idea!

Strong leadership, decision-making skills, and creative marketing efforts seem to be the key factors in the whiplash-like turnaround from Starbucks. The next time you’re sipping that indulgent cup of joe, percolate on this: it’s more than a quality coffee bean that makes for the most popular coffee.

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One Response

  1. Martin Lindstrom (genius) had mentioned Starbucks in his well-known book, BRAND Sense (awesome). He said Starbucks was coming out with too many products and needed to focus on what their brand was all about: COFFEE! Sounds like they read the book too?

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