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StarbucksDesign Brief
November 4, 2010
Benjamin Gadbaw
Christopher Cannon
Cooper Smith
Tina Ye
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Starbucks represents somethingbeyond a cup of coffee.
HOWARD SCHULTZ
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In 2009, Americans drank 146 billion cupsof coffee
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In 2009, Americans drank 146 billion cups of coffee(Thats $40 billion in sales)
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=1 BILLION CUPS OF COFFEE
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=1 BILLION CUPS OF COFFEE
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Home Coffee Sales:
$6.3 billion
($915 million in specialty coffee sales)
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VIA US Instant Coffee:
5% market share
($100M first ten months. Estimated $1B by 2015)
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Competitor Revenues(in billions)
Starbucks
McDonalds
Dunkin Donuts
2005 2006 2007 2008 2009
0
5
10
15
20
25
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McDonalds Latte:
(40 less than Starbucks)
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$6.9 billion yearly sales:
(servs 30 cups of coffee every second)
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Starbucks Response:
30,000 economy coffee outlets
(supermarkets, Burger King, Subway, AMC theater)
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The Third Wave:
+70% specialty coffee houses in 5 years
(thats one coffee house for every 14,000 Americans)
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The battle within the
company is making sure growthdoesnt dilute our culture.
HOWARD SCHULTZ
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Market Saturation:
900 Starbucks store closures in 2009
(within the United States alone)
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Strengths Starbucks is the market leader in the coffee industry Product diversification
It has 16,635 stores in 40 countries worldwide including
11,068 stores in the United States Company operated retail stores, (licensees, no franchises)
Customer service is excellent
Customers are satisfied with the quality and taste of coffee
High brand awareness and equity
Approx 13,000 valued and motivated employees,good work environment
Financial conditions of the company are good
Starbucks coffee shops locations are at convenient places
like library, shopping malls and etc.
Starbucks making their business more environmental friendly Customer base loyalty
Good relationships with suppliers
Product is the last socially accepted addiction
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Starbucks seeks to be an authentic coffee
experience that conveyed the artistry of espressomaking, a place to think and imagine, a spot
where people could gather and talk over a great
cup of coffee, a comforting refuge that provided
a sense of community, a third place for people
to congregate beyond work or the home, a place
that welcomed people and rewarded them for
coming, and a layout that could accommodateboth fast service and quiet moments.
HOWARD SCHULTZ
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Starbucks Primo
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Kent, WA
Portland, OR
Minden, NV
Columbia, SC
York, PA
Starbucks Roasting Plants
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Store Conversion Budget
Conversion to a Starbucks Primo will share many similarities with opening up a
new store. The biggest expenses will be:
Retraining or rehiring staff
Redesign & remodeling of store
Acquisition of furnishings and decor
Acquisition of supplies & stock
(complementary food items, coffee, liquors)Administrative and infrastructure changes
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New store in 1995: $350,000
x 44% inflation rate
New store in 2010: $504,000
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Cost of implementing a Starbucks Primo:$400,000
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Implementation time per store: 3 monthsForegone revenue: $250,000
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Total cost of implementation per store is$650,000
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1,000-1,500 square feet
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1,000-1,500 square feet4570 seats
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1,000-1,500 square feet4570 seats
x 5 hours
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1,000-1,500 square feet4570 seats
x 5 hours
= 225350 people a night
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1,000-1,500 square feet4570 seats
x 5 hours
= 225350 people a nightx $15/person
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What does $15 look like?
5-cup Coffee-Tasting Flight: $18
... paired with dessert offerings: $25
A single specialty coffee drink paired with a
single dessert offering: $11$20
A couple alcoholic coffee drinks: $12$18
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1,000-1,500 square feet4570 seats
x 5 hours
= 225350 people a nightx $15/person
= $3,375-$5,250 per day
x 365 days= $1.3 million$2 million a year
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Projected Revenues(per store)
Average Store Revenue (2009) Projected one-year revenue
$930,000
$2M
$1.3M (1,000 Sq. Ft. Stores)
(1,500 Sq. Ft. Stores)
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Starbucks Primo. . . . . . . . .
Starbucks. . . . . . . . .
Seattles Best. . . . . . . . .
Via
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(Starbucks) Circadia
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HIGH ENDi i i
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CHAININDEPENDANT
LOW-END
HIGH-END
Starbucks
Seattles Best
NespressoStumptown
15th Ave
Local Cafs
Peets Coffee
Dunkin DonutsNeighborhood
Corner Stores McDonalds
Positioning
HIGH ENDP iti i
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CHAININDEPENDANT
LOW-END
HIGH-END
Starbucks
Starbucks
Starbucks Primo
Seattles Best
Nespresso
Stumptown
15th Ave
Local Cafs
Peets Coffee
Dunkin DonutsNeighborhood
Corner Stores McDonalds
Positioning
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MondayFriday
Weekend
WAKE
WAKE
GET TO WORK LUNCH
LUNCH
SLEEP
SLEEP
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=1 BILLION CUPS OF COFFEE
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Long Term Benefits
Increased visibility
Increased respect among the coffee-drinking elite
Strengthened brand equity
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