It is clear that Starbucks has enjoyed great success since it was founded 30 years ago. The company has been doing very well for the last 11 years with 5% or more store sales increase even after the post-9/11 recession. The only issue Starbucks seems to be facing is meeting customers’ expectations. Customer service can be down because Starbucks may have lost the connection between satisfying their customers and growing their business. Customer service can also be declining due to the time required to be served and employee attitude.
According to the exhibits shown in the case study it shows that the company has experiences huge growth both geographically and financially from 1998 – 2002 since during these times the net income more than tripled as well as the stores worldwide. Exhibits 3,4, and 5 show the payroll structure, income volume per location and product mix for North American company-operated stores. Exhibit 6 shows US retail coffee market predictions until 2005 years. It clearly shows changing in American’ coffee drinking style into specialty coffee.
It is very important that Starbucks takes note of this as their main market is specialty coffee and their business stresses as big value proposition in creating an “experience” around the consumption of coffee, thus customer satisfaction is very important. After reviewing exhibit 10, it seems that “speed” may not be the most important issue driving customer satisfaction. All the other exhibits show positive customer snapshot scores for North America stores with one other issue regarding product quality. Exhibit 8 shows that customers who first visited Starbucks five years ago have higher degree of education and a higher income level.
Now customers do not see it as a brand of high value. This is an issue as Starbucks prides itself on “lifestyle” instead of just the coffee. Exhibit 10 shows factors driving “valued customer perception. From 34% of responders indicating better service as a factor, 19% want to see friendlier staff and only 10% want to have faster service. From 28% of responders indicating better prices and incentives as a factor, 19% of them believe “free cup after x number of visit” as the most important improvement. Therefore we can see that additional employees to speed up the service is not a solution to fix the ompany’s problems.
I do not believe that investing 40 million per year to increase labor hours per store is the best solution as it does not appear to be the best way to fix Starbuck’s problems. I believe Starbucks customers go there for an experience and because of its unique style and not because of speed. Speeding up their service may increase market share, but it is not the most important issue faced by Starbucks. My recommendation for Starbucks is that instead of throwing in an extra 40 million on creating 20 more hours a week, they should invest in creating an internal strategic marketing team.
This will allow Starbucks to have a proactive feedback of customer satisfaction, which will create faster improvement. Although it is a good thing that Starbucks is consistently making new products and expanding the menu, they need to get better at productivity. The fact that many products require numerous steps to complete the order hinders performance and complicates the job of a Barista. To improve this, Starbucks can integrate a management system where the more experienced baristas can handle the complicated orders.
In addition, they should invest in the installation of customer operated machines and automatic espresso machines in some stores to reduce wait time. They can also excel their prepaid card by embedding RFID tags to identify the customer and the orders to add to a database. Other things they can do is reduce waste in making drinks, creating an eco-friendly image. Lastly, they can also keep consistency in drinks and improving productivity, so savings could be used in free cup after x number visits program, which is something highly anticipated among customers.