Starbucks, Perched on the Precipice?

Has the Starbucks "hype" passed? Has the great coffee empire entered a slow but inevitable decline? Are corporations like Starbucks built like empires or like the goldrush? Perhaps we can see some evidence of the beginning of the decline. Is it possible for a corporation to continue to deliver quality on a massive scale? I say no and I predict they're at the edge of a precipice leading to a (possibly short depending on their behavior) decline, the evidence for which is the declining quality of goods, a reduced customer focus and economies of scale that don't work. Starbucks is getting threadbare and is fraying at the edges.

I remember many, many years ago (and this will either tell you how old I am or how young I started drinking coffee) walking into a Starbucks for the first time and being entranced by the powerful coffee aromas, the atmosphere and the locally produced baked goods. It was along the lines of what I thought a french cafe or bistro should be like. Up until that point I didn't really drink brewed coffee. I did however craft my own cappuccinos at home. My heritage demanded strong, dark coffee with no compromises.

So there I was, in my first Starbucks. The coffee was delicious, the best brewed coffee I'd had in my life. It actually tasted like coffee, rather than the mysterious but unpalatable flavors I'd had in other restaurants.

Their baking was fresh, natural and delicious. So for many years, Starbucks was a daily routine for me, a tall coffee and an apple crumble muffin on the way to work in the early morning.

Years later, I moved to a smallish city (way less than a million people) that - yes I know you won't believe this - didn't have a single Starbucks. So for nearly 10 years I was back to drinking strange brew and whatever the local bistros thought was good coffee. Then, out of the blue, a few Starbucks opened up over night! I was saved! But from the first moment I walked into the “new” Starbucks I knew something was different.

The first clue was the absolute decline in customer service. “Baristas” no longer displayed the sense of ownership they once did and I had a distinct feeling that I was standing in a line at a fast food restaurant. The servers were brusque and clearly weren't paying attention to what I wanted. My Americano was watery and tasted like dishwater. I returned it and asked for another, with the resulting coffee being the exact same watery, unpalatable disaster.

No more short sizes

The next strange thing I found was that out of 15 or so Starbucks I tested, not one of them was selling short sizes anymore and the change came out of the blue. Some days I don't need huge quantities of caffeine or coffee, and a short size cup is just perfect for a few shots of espresso or a small cup of dark roast.

Doesn't brew decaf

Perhaps the strangest thing I've encountered is that none of the Starbucks I've visted across Canada in the last few months brews decaf in the afternoons anymore. This was explained querulously to me by a staff member who seemed to think I was crazy for wanting decaf in the afternoon. So I ask you Starbucks, why would one want decaf in the morning but not the afternoons? Statistically and reasonably (at least from my frame of reference) it is more probable that a person would want caffeine least in the afternoons, i.e. to prevent sleep cycle disturbances, over stimulation, etc.

Brusque, rude and unqualified staff.

Walt Disney knew it, Futureshop (Best Buy) knew it and Starbucks knew it. Make your employees feel like they're part of a distinct, elite team of specialists and you'll attract the best employees in your labor force (lets not underestimate the appeal of sophistry). In early years, I found the employees of Starbucks to be knowledgeable, caring and professional. But at some point, “Baristas” aren't coming out of the woodwork. Some people might just be there to make a buck and pay their bills. It seems obvious to me that today's Starbuck's employees are far removed from their past, elite primogenitors. In the past, you were greeted by a courteous, friendly employee who seemed to have genuine social skills and could judge when you were in the mood for artificial pleasantries and when you weren't. This is after all a coffee shop where people go when they're in dire need of a stimulant to get their motors running (or jump started) for the day.

Decline in consistency

One thing that will make or break any franchise over the long term is it's ability to control consistency across geographically disperse locations. Starbucks historically (at least in my experience) offered good consistency no matter where you were. However, I've noticed a strong decline in consistency in almost all locations I've visited. The same blends of coffee taste dramatically different from location to location.

Is this a sign of the beginning of the end? It's impossible to say definitively, but it certainly doesn't look good from the consumer's standpoint and shareholders aren't any happier. Starbucks took a beating like everyone else during the recession and some are recovering better than others. Starbucks suffers from a radical dichotomy of economies of scale, that is the requirement to commodify quality. Is it possible? I suspect not, but we'll see. Will Starbucks recover back to their previous levels? I suspect not and we all know that in the profit driven system of today's markets you're either growing or you're dying.