The Starbucks Insider

Jim Donald is being let go with a fairly small severance package as far as major publicly traded companies go. With a salary of $1M a year, and then further stock options Jim Donald will get $1.25 over the coure of the rest of the year for his severance package.

Again, I think it’s a reasonable level for the work that he did. Not saying he did a great job in the last year, but at least he isn’t being given a bloated severance package.

Seattle PI Story

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Are these new cheaper and not as well designed lids being rolled out everywhere? I just got my morning drink and am not to happy with the new lids. They feel like they would be hard for the baristas to put on without smashing, and they just dont’ feel sturdy like a Starbucks to-go cup should feel.

Anybody else have these lids? Am I the only one that thinks they look and feel way to cheap for Starbucks? I guess they’re having to compete with McDonalds across the board now huh?

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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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Looks like Hershey’s is looking for a way to boost their sales and that Starbucks is of course looking for the same with some good chocolate. Starting in March Hershey’s and Starbucks are partnering on a line of chocolate which I guess could bring together the best of both worlds.

What I wonder is, will this be a Starbucks chocolate bar or will it be a set of chocolates sold inside Starbucks. If it is a line of chocolate to be sold inside of Starbucks stores I am very surprised by this move. With Starbucks trying to create a much better experience I would be surprised if they had branded chocolate inside their store that was not from a small botique chocolate maker. I know of two chocolate companies just in Seattle that I think would be the perfect fit for selling at the register in a Starbucks. However, a Hershey’s and Starbucks branded chocolate bar being sold at your local grocery store makes alot of sense to me, and I really hope that is the direction this partnership is going.

Reuters Article

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It’s good to see a large company like Starbucks keeping their bonuses in check. Howard, Jim Donald, and Jim Alling didn’t recieve their stock bonuses last year becasue of the poor performance Starbucks had in 2007.

I’m really happy to see something like this with a large publicly traded company. I feel that these execs deserve the huge paycheck they receive, as long as they are delivering to the shareholders. In an age where Robert Nardelli drives Home Depot’s stock into the ground and he’s rewarded with a $210M severance package as well as many other similar examples, it good to see that Starbucks execs compensation is actually tied to their performance.

Seattle Times Article

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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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Here’s a great interview done by Andy Serwer at Fortune Magazine.  He talks with Howard about why he came back, what is going to change, what the biggest points of focus will be over the coming months and years.  Some great questions and answers to give a little more insight into what Howard is thinking than a one sided memo.Here’s a few of the tidbits that jumped out to me; 

• Howard talks about better rewarding their loyal customers.  That 15% of purchases are on a Starbucks card.  Does this mean a rewards program of some sort?
• Howard is not a fan of the fact that Starbucks turned its focus to efficiency from experience.
• He won’t take the easy out and blame their recent performance on fears of a recession. 
• In regards to food.  He says, “Less could be more” meaning that they could be cutting back on their pastries.
• There were 4,000 people at a company meeting for when Howard announced that he was coming back and he received a standing ovation.

  Great interview with alot of insight.  What do you think Starbucks needs to focus on, cut, change in order to turn things around?Fortune Interview 

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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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Starbucks will now be carrying a new type of juice in their RTD (Is that what it’s still called?) case. Naked Juice, which is owned by Pepsi, will be the new expensive juice of choice inside your local Starbucks.

Not a huge shakeup as the two juices are very similar, but I will be a little dissapointed the next time that I am sick and can’t get a C Monster to help fight off the cold.

Do you even care about this move?

AP Story

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Starting in a few weeks Starbucks will no longer be offering organic milk as an option for their drinks. Since Starbucks has now made the switch to only milk that is from cows who don’t use growth hormones they feel that there is no need to offer the ogranic choice.

According to Michelle Glass, the SVP of Global Strategy;

Far and away, the No. 1 reason people are purchasing organic milk is because [it lacks] the growth hormone

Seems to make sense for Starbucks to take the crganic milk choice off of the menu, especially since it only accounted for less than 1% of their drink orders even before the move to their new milk.

What do you think, should they keep truely organic milk as an option in the store, or does the move away from growth hormone’s do enough?

As a side note, it will help with the coffee aroma in their stores. Have you ever smelt freshly steamed organic milk? No thanks.

WSJ Story

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