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What The Frap Is Wrong With Starbucks?

Starbucks proves that even the biggest brands can’t afford to be everything to everyone.

By E.M. Ricchini

A few years ago, a crowd gathered outside a new establishment in the Los Angeles suburb of Los Feliz. The line wound around the small strip mall, well past the neighboring coin-operated Laundromat and out into the sidewalk. Patrons excitedly gawked and giggled. The building at the terminus of the line was emblazoned with a familiar icon: a green siren and the name of Ahab’s chief mate in Moby-Dick. There was only with one small change: this was no normal Starbucks. It was “Dumb Starbucks.”

The brainchild of Comedy Central’s Nathan Fielder, Dumb Starbucks originated as a prank for a television show. According to Fielder, its impetus was a kitschy, tongue-in-cheek statement about the tenuousness of fair-use and copyright laws: “[parody] allows you to use trademarks and copyrighted material as long as you’re making fun of them.”

While Los Angeles residents were enjoying Dumb Starbucks, the real Starbucks was well on its way to earning its own “dumb” moniker — and not in the comical way. The brand is now in real trouble: it recently announced the closure of 150 stores in the U.S. within the next year.

In trying to appeal to an ever-wider audience, Starbucks sacrificed the quality café experience it was always known for. Over time, the original caffeine culture brand abandoned its brand story and became a parody of itself — and it has been eclipsed by entrants that better embody its original brand values.

When Parody Becomes The Reality

How did such a beloved brand fall so swiftly? Devoted Pike’s Place drinkers and those who indulge every so often have both noticed that, in recent years, Starbucks — once known for its unique way of bringing people together to enjoy the Parisian model of a café — is barely the same brand.

Former CEO Howard Schultz says many factors contributed to Starbucks’ waning performance and popularity, most of them out of his control. Schultz blamed the financial crisis, the brand’s newfound place in the market as an “in-between” option, (Dunkin’ Donuts and McDonalds being low-end competitors and independently-owned coffee shops being on the high-end.) and negative blog coverage. When asked if getting rid of company-owned stores and franchising out all of its locations would be an adequate fix, Schultz responded by saying, “You have to have a 100% belief in your core reason for being.”

Starbucks has a core reason for being, or at least, it claims to, and that reason is creating a café community. But Schultz himself seemed unaware of what the brand’s core purpose is, and the company’s evolution betrayed this ignorance.

In the same interview, Shultz mentioned Starbucks’ introduction of VIA, their brand of instant coffee, and how from its inception, researchers cautioned against it. They warned Schultz that it would dilute the brand. They were right: how does a cheap packet of instant coffee to be made at home or on-the-go add to a narrative of drinking coffee with fellow patrons in a stylish café? It doesn’t. While VIA was a lucrative short-term financial move, what Schultz failed to see was that it was one small undoing that would undermine the rest of the brand story Starbucks worked so hard to cultivate.

VIA was the first of many brand missteps aimed at chasing ever new customers and demographics, and though it paid off financially in the short-term, the same can’t be said for Starbucks’ other missteps.

Since the VIA experiment, Starbucks made a few major acquisitions: the most notable of these is the $620 million purchase of Teavana, a loose-leaf tea shop most often found in shopping malls. Starbucks announced last fall that they plan to close all 379 stores by the beginning of next year. Teavana offered no seats for patrons to gather — in fact, aside from a few samples at the front of the store, it didn’t offer any product that was made in-house. By trying to run shops that simply sold tea — rather than offering a gathering place — Starbucks strayed far outside its core brand story of cultivating a café community, and the venture fell flat.

Between a constantly expanding menu, and equally chaotic marketing stunts, the brand behind the mermaid today only slightly resembles the behemoth that took off in the early 2000s. Whereas its expansion 18 years ago proves that its original positioning was compelling to consumers, its newer pivot of being everything to everyone has seen it hitting one of the lowest lows last summer.

Nothing illustrates Starbucks’ attempts to please everyone quite as succinctly as its failed attempt at making wholly inoffensive holiday accouterment. For 20 years, Starbucks made a tradition of releasing limited-edition winter-themed cups. They often featured Starbucks’ signature red along with an abstract winter scene such as snowmen, geometric snowflakes, pine trees, or Christmas ornaments.

In 2015, it unveiled a minimalistic red cup that would prove highly controversial. Some saw it as another attack in the “War on Christmas,” while others were simply offended that Starbucks was trying too hard to not offend. Rather than bringing both sides of the political spectrum together, Starbucks’ half-hearted attempt to appeal to everyone ended up alienating both sides of the spectrum.

The following year, in order to promote unity, Starbucks released a limited edition green cup with faces and figures drawn using one continuous line. Almost comically so, this second attempt at appealing to every consumer only drew more mockery. Many consumers felt that this over-the-top attempt at being P.C. was a condescending oversimplification of a serious and complex racial issue, while others took issue with its political correctness.

These issues illustrate a deeper issue in the organization. All communities are built around shared beliefs and purpose — and that extends to brand communities. By attempting to appeal to everyone, Starbucks signaled that the community was no longer held together by any single set of shared beliefs — eliminating the entire purpose for bringing people together in the first place.

The Third Place

Since Starbucks’ inception, it has defined itself as the “third place:” a space between work and home where community can thrive. As coffee became less commoditized, and consumers were beginning to note the origins of their brews, Starbucks offered a moderately elite experience that made specialty coffee accessible and created a café culture of its own — complete with a proprietary vernacular (the terms “Tall, Grande, and Venti” would later become the bane of every independent coffee shop barista’s existence.)

More than just offering the feeling of a boutique experience, Starbucks gave consumers a distinct opportunity that didn’t exist, especially in suburban and rural markets: it was a comfortable and aesthetically pleasing place to gather.

Although Starbucks still touts itself as a neighborhood gathering place, its evolving business model says otherwise. Over eighty percent of new stores have drive-thru windows, and an intuitive mobile app allows caffeine addicts to order their drink from their phone, walk into a store, and pick it up from the counter without even having to interact with a barista. In fact, these mobile payments now account for over 30 percent of the brand’s transactions. Locations with drive-thrus serve more than 70 percent of their customers that way.

Furthermore, rather than honor the particular community it created, in the pursuit of more sales, Starbucks has sought to add more and more communities to its customer base. In order to try to bring in more affluent, and more sophisticated coffee-devotees, for example, Starbucks launched high-end Reserve stores that would often sit within regular Starbucks stores, but with higher priced tags, more sustainable coffee, more luxurious architecture and furniture, and pour-overs. Yet next to this luxury, Starbucks continues to sell its sickeningly sweet Frappuccinos, and milky drinks that appeal to an entirely different consumer.

Starbucks’ poorly executed attempt to capture divergent communities in one place, and under one brand, has sent its entire brand into crisis. In the constant pursuit of the latest coffee trends, Starbucks has barely even held on to the one piece of its identity that remained: its dark roasted beans. Starbucks popularized dark roasted coffee, making the term “bold” nearly ubiquitous beyond its properties. Rather than proudly embracing the one original tenet it had left, Starbucks co-opted the currently trending love for light roasts by releasing its own Blonde roast as a drip coffee and later, as espresso.

Trying to win over those consumers the independent coffee scene didn’t work, with most remarking that Starbucks should have known better than to dabble in something that thousands of small coffee shops do much better.

Just like the coffee cup changes, Starbucks’ evolution to try to be everything to everyone is a betrayal of the story that customers fell in love with. Brands that pursue short-term commercial gain against the core of their brand story rarely reap rewards worth the long-term damage.

What’s Next?

While their many brand missteps will likely not be the end of Starbucks as an organization, the business’s responses to them show that its relevancy will only continue to decline in the coming years. While it’s closing three times as many stores as usual in the coming year, the independent coffee scene continues to grow in popularity and market share.

By trying to appeal to every type of consumer, Starbucks seems to have repelled a large number of them. It no longer takes the “Dumb Cappuccinos” or “Dumb Cakepops” of Fielder’s experiment to poke fun at the absurdity of Starbucks’ efforts to please every kind of consumer. It’s up to the brand to recognize what sets it apart now, as there are more — and better — options for consumers to find a café community.

 

E.M. Ricchini is an associate at  Woden. Whatever your storytelling needs may be, let Woden help. Download our  free StorytellingBlueprint, or send us an email at  connect@wodenworks.com to discuss how we can help tell your story.