The Starbucks Insider

From the 3rd to the 17th of February all employees at the two stores that sells the most whole bean coffee during that time. This seems like a pretty big promotion if they will be giving away probably 40 or so $250 iPod Touches. I know I’d be working hard as a barista to try to get a free iPod touch.

So will it be annoying, or will they go about it in some unique ways. Corporate sales anyone?

The promotion comes from a “leaked memo” that Howard sent out to all employees earlier today. The entire memo is after the jump

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I was at the Upper Queen Anne Starbucks in Seattle yesterday and noticed a new seperate group of machines with special branding around them. I asked what one of the machines that I had never seen before was and I was told it was a “Clover,” a coffee press. That it makes a french press cup of coffee in about 40 seconds rather than 4 minutes.

The person I was there with and myself tried two different flavors (Arabian Mocha Sanani and Aged Sumatra) and were very impressed. They measure out the beans, grind the beans, put it into the machine, which has some cool features while it’s pressing the coffee, and then served up delicious roasted coffee. It was pretty close to a french press, and I could definitely see myself ordering it again.

The whole process definitely took a few minutes though, so I think this is something that Howard is a bigger fan of than Jim Donald would have been. It’s getting back to delicious fresh coffee, but the inefficiency of the whole store would be hurt if these were ordered during a rush. It also cost more than $3 for a grande, which seems steep for roasted coffee, but they have to make up for the time it takes and the new machine somehow.

They’re testing them in the Upper Queen Anne Starbucks as well as the one downtown at 6th and Union in Seattle. Have you had a Clover? What were your thoughts? Would you buy it consistently at the price?

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Seattle area stores are testing out a short drip coffee (8 oz.) for $1. They are also testing out going back to free refils on drip coffee while you’re in the store. A few ways to keep people in the store, and also create a lower barrier to entry. The dollar menu was made popular by McDonalds, so maybe this is Starbucks way of saying you come after us, we’ll come after you.

I don’t know how well an eight ounce coffee for a dollar will sell, especially with all of the orders to go these days, but it’s worth a shot, and if it’s succesful it will be a great marketing tool.

WSJ Article

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Saw this piece from Head Butler talking about what has gone wrong with Starbucks over the past however many years, and why it is bad for all of us.  I may disagree with a few points here and there, but overall, it is a great article. Starbucks, used to be the coffee house that brought everybody together, and now, with its cookie cutter, poor performing stores there is no longer this one location.  Can Howard bring back the real “Starbucks Experience” that will have people calling Starbucks the third place again, or is it to late? Head Butler article on January 17  [via The Huffington Post]

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Todd Wenning over at Monley Fool has just named SBUX as the worst stock pick for 2008. He lists a few reason, and draws a correlation between Howard and Michael Jordan, and although I disagree, I think he makes some valid points for why the stock won’t rebound in ’08.

“Diminished competative advantages” and “Watered down experience” are his two reasons. They are both valid concerns, and in all honesty, they’re what I think Howard noticed not being taken care of while he was gone that made him step back. Wenning, brings up a great point that I wondered about when I read, “Pour Your Heart Into It” a few years ago;

According to Schultz’s 1997 book Pour Your Heart Into It, franchising was “almost a forbidden word to Starbucks.” “We refused to franchise,” Schultz said, “Although it would have been tempting to share costs with franchisees, I didn’t want to risk losing control of the all-important link to the consumer.”

Ironically enough, just one year later, Starbucks introduced its first “licensed” location at Albertson’s grocery stores. Even though licensed locations in stores such as Target (NYSE: TGT) and Safeway (NYSE: SWY) helped Starbucks expand and kept financial costs down over the past decade, the initiative may end up costing the company brand value in the long run. These locations, after all, are not the typical Starbucks “third place,” but simply “refueling stations” for sluggish shoppers who need a caffeine boost before spending money.

I think that fixing this is priority number one for not only the SBUX stock, but also to create a better astmosphere to work in and make your third place again.

How do you think the stock will go this year? Howard’s back, McDonalds is coming on strong, and the price of milk has increased… what will this all mean?

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If you go to Starbucks.com (as of 1/13/08) you will be welcomed by an open letter by Howard Schultz talking about his passion for Starbucks, his taking over of the CEO position, and how Starbucks will be making the Starbucks Experience a major point ofemphasis. It’s a good PR move and I think that the “Starbucks Experience” is really what Starbucks needs to bring back in order to regain the confidence of their customer base as well as Wall Steet.

Since the memo will probably be removed from the main page shortly I will post the entire message after the jump.

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