Starbucks: Cool or a commodity?

Try, try again
Starbucks has tried to stay up on the trends, though. It recently concocted the skinny drink, a nonfat latte with sugar-free syrup, for health fashionistas. And the company just announced it’s testing $1 coffee and free refills in its hometown for the economically pinched, who maybe can’t afford themselves the $4 Starbucks latte.

"It was a luxe product and we’re moving into an un-luxe world," Salzman, the trendspotter, said.

Starbucks’ Behar, who wrote the book “It’s Not About the Coffee: Leadership Principles from a Life at Starbucks,” explains that trial and error goes into discovering a hit beverage like the Frappuccino, which Schultz resisted at first. Generally, though, he encouraged persistence even if he didn’t support the idea initially, Behar wrote in his book.

“If we have an idea, he insists that we pursue it until it does work,” he wrote.

But some just don’t. Enter the joint Pepsi and Starbucks creation — a sparkling coffee drink called Mazagran (Maybe the name had something to do with it?).

“Customers will tell you if they want it or not — if they give you the permission to sell it,” he said in a phone interview.

Elaine Thompson / AP file Howard Schultz plans to "re-energize" the Starbucks brand by jazzing up drinks, store designs — and training employees harder.

Schultz’ “re-energizing” mission includes jazzing up Starbucks’ drinks and store designs — and training employees harder, he announced earlier this month.

But really, Schultz needs to set apart the coffeehouses’ one-of-a-kind experience from an ordinary coffee service, said Joseph Michelli, author of “The Starbucks Experience.”

“Otherwise, he’s going to be competing against a discounter,” he said.

The McDonald’s threat?
Enter McDonald’s. Its baristas will soon craft and sell cappuccinos, lattes and the whole Italian menu at all of its U.S. stores. Embarrassingly, McDonald’s cheaper regular coffee beat Starbucks’ in a taste test conducted by Consumer Reports.

How great is the McDonald’s threat? Not a biggie — yet. People who seek out places like Starbucks still want the ambience that’s missing at McDonald’s, said John Owens, an analyst with Morningstar.

“McDonald’s poses more a threat to Dunkin’ Donuts,” he said. “Both those chains are keeping more on price.”

But people are more price conscious now amid our economic downturn.

That’s likely to hurt Starbucks’ earnings Wednesday. Schultz must give investors a delicious plan to digest to distract from the expected bad results, Owens said.

“McDonald’s introduced a plan to win: Focus on being better, not bigger,” he said. “That’s an enormous success.”

Maybe, Starbucks will follow suit.

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