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Starbucks: Back to Basics

A look at what they did to revive their “neighborhood coffee shop” appeal in the US

November 2011

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Overview

How did they get back to basics? Barista Training New Products Inspire Shareholders Engage Management Close Locations New Advertising New Packaging In-Store Design

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Back to Basics: Baristas• In February 2008, Starbucks closed

7,100 of its American stores at precisely 5:30 pm for a 3-hour retraining session for employees.

• Baristas practiced dispensing espresso into shot glasses, checking the color of each shot, and paying attention to the particularities of steaming milk.

• Each training session included a video message from CEO Howard Schultz about the various operational changes and improvements.

"This is not about training, this is about the love and compassion

and commitment that we all need to have for the customer.”

– Howard Schultz, CEO

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Back to Basics: Baristas

Take the time to Re-Train and Re-Focus on what matters for your brand

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Back to Basics: Inspire Shareholders

Our Aspiration: To become an enduring, great company with one of the most recognized and respected brands in the world, known for inspiring and nurturing the human spirit.

SEVEN BIG MOVES

1. Be the undisputed coffee authority

2. Engage and inspire our partners

3. Ignite the emotional attachment with our customers

4. Expand our global presence – while making each store the heart of the local neighborhood

5. Be a leader in ethical sourcing and environmental impact

6. Create innovative growth platforms worthy of our coffee

7. Deliver a sustainable economic model

The Seven Big Moves were declared to share holders in

March 2008

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Back to Basics: New Products• In April 2008, Starbucks launched

a new coffee called “Pike Place Roast” – a smoother roast made mostly from Latin American beans and based on one of the chain’s earlier blends.

• The blend is named after the

iconic market in Seattle, where the chain first started out, and aimed to appeal to the broader McD/Dunkin coffee drinker.

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Back to Basics: New Products• In the 2008 Barista training,

employees were reminded that the chain was getting rid of “odoriferous breakfast sandwiches” so customers can smell the coffee again.

• The food team discovered that improving the quality of the ingredients – leaner bacon, better ham and cheese – helped reduce the aroma.

• Sandwiches were re-launched in June 2008 with Ciabatta bread and a lower baking temperature.

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Back to Basics: In-Store Design• As the brand solved the issue of

the burnt cheese smell, they worked to restore the coffee shop aroma.

• The drink preparation is more prominent. New, lower machines allow guests to see their drinks being prepared by the baristas.

• Additional design elements of burlap bags and coffee beans in addition to freshly ground coffee beans brought the stores back to their true focus – great coffee.

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Back to Basics: In-Store Design• Although not yet in national

distribution, Starbucks is looking into a new brewing system that attempts to bring espresso-like involvement to drip coffee.

• “The Clover® brewing system uses innovative Vacuum-Press™ technology to create your cup right in front of you. You watch as a stainless steel filter lowers into the brew chamber. Hot water is added at a precise temperature to brew your coffee for an ideal length of time…”

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Back to Basics: In-Store Design• Re-hired Arthur Rubinfeld to

redesign the stores, using color, layout and design to “recapture the coffeehouse feel”

• Replaced all outdated POS computer systems, and scaled back on books and music – focus on coffee

• Created a customer rewards card to encourage the core user

• Appointed Chris Bruzzo from Amazon to kick online and social efforts into high gear

Costco's CEO once said:“losing customers in a down economy is much

more expensive than investing in them.”

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Back to Basics: Close Locations• In July 2008, Starbucks

announced that it would close 600 US stores that year.

• In the process of the store closings, more than 12,000 employees were laid off, the most in company history.

• The closings were part of the brand’s effort to recapture growth and counter general economic troubles, and helped cut $850million in costs

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Back to Basics: Engage Management

• In October 2008, Starbucks held a leadership conference in New Orleans for company employees and managers.

• It served as a way for them to become re-acquainted with the basics of the brand – even offering samples of the chain’s espresso and specialty blends.

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Back to Basics: New Advertising

Starbucks selected BBDO as their agency of record in

the Fall of 2008, and released this ad sharing

their thoughts on the importance of exercising

the right to vote.

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Back to Basics: New Advertising• In May 2009 Starbucks launched a new

print campaign in response to the coffee competition from McDonald’s and the 8% decrease in same store sales during the first 3 months of 2009.

• The aim was to tell its message to a new generation of coffee drinkers and then recruit them to retell the story online.

• The advertising effort which included outdoor, newspaper, and magazine, was the biggest marketing effort Starbucks has undertaken.

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Back to Basics: New Advertising

The print campaign was seen in 6 major US cities

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Back to Basics: New Advertising

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Back to Basics: New Advertising

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Back to Basics: New Advertising

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Back to Basics: Baristas• Additional barista changes in

October 2010 aimed to increase the beverage quality, even at the expense of speedy service.

• Baristas should focus on no more than 2 drinks at a time and steam milk for each drink rather than a pitcher for several beverages.

• Other instruction include rinsing pitchers after each use and using only one espresso machine instead of two .

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Back to Basics: New Packaging• The packaging for the Pike Place

Roast uses the traditional brown label with an old version of the Siren logo.

• The new wordless logo revealed Jan 2011 aimed to suit the company’s expansion beyond coffee into a wider array of business lines and into international markets.

Pike Place Roast Website

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Back to Basics: In-Store Design• July 2009 began the test launch of the

Starbucks’ 15th Ave E Coffee & Tea Store.

• The idea was to create a coffee shop that had the name of the neighborhood, rather than the 16,000 store chain which they belong to.

• The overall project aimed to give the stores a “community personality” and capture the spirit of a traditional coffee house – serving wine & beer, hosting live music an poetry readings.

• The test ended in January 2011 with a new sign and the return of the Starbucks logo and equipment to the 15th Ave east Location, but the store got to keep its new décor.

15th Ave E Coffee & Tea Store

Location at Capitol Hill in Seattle

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Back to Basics: In-Store Design

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Back to Basics: In-Store Design

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Back to Basics: In-Store Design

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Back to Basics

• In order to get back to basics, Starbucks shifted their focus from selling CDs, mugs, and speedy drinks to what really matters for their brand – Best Tasting Coffee.

• If KFC wants to mirror their path, it’s time to shift the focus from one off product tests back to what makes them relevant – Fresh Chicken.

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Back to Basics: Timeline

2008

• System Wide Barista Training

• Pike Place Roast Introduced

• New Breakfast Sandwiches

• Declare 7 big moves to shareholders

• 600 Stores Closed

• Ad for November Election

2009

• New Print Campaign Launched

• 15th Ave E Coffee & Tea Store Opened

2010

• Barista operational changes to improve drink quality

2011

• New Logo Introduced

• 15th Ave E Coffee & Tea Store re-branded as a Starbucks

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Articles“Back to Basics for Starbucks Baristas” (2/27/2008)

http://www.nytimes.com/2008/02/27/business/worldbusiness/27iht-27sbux.10458541.html

“Starbucks Announces It Will Close 600 Stores” (7/2/2008)http://www.nytimes.com/2008/07/02/business/02sbux.html

“New Starbucks Ads Seek to Recruit Online Fans” (5/18/2009)http://www.nytimes.com/2009/05/19/business/media/19starbux.html

“Starbucks tests New Names for Stores” (7/16/2009)http://seattletimes.nwsource.com/html/localnews/2009479123_starbucks16.html

“15th Avenue E Coffee & Tea by Starbucks Coffee Co” (7/23/2010)http://www.furnitureandfinishes.com/interior-design/2010/7/23/15th-avenue-e-coffee-tea-by-starbucks-coffee-co.html

“At Starbucks, Baristas Told No More Than Two drinks” (10/13/2010)http://online.wsj.com/article/SB10001424052748704164004575548403514060736.html

“New Starbucks Logo Unveiled” (1/5/2011)http://www.huffingtonpost.com/2011/01/05/starbucks-new-logo_n_804809.html

“The Saga of the Stinky Cheese” (3/13/2011)http://www.thedailybeast.com/newsweek/2011/03/13/the-saga-of-the-stinky-cheese.html