Just the words Starbucks Value Meal send a chill down my spine… a chill of reality perhaps, the acceptance that the chain really is just another fast food company.
I’m quoted in the most recent Associated Press article this morning as saying “You’ve got a lot of options right now for the more price-conscious consumer to save money,” referring to the state of the specialty coffee industry. Look for the article in a newspaper near you.
However, there’s more to that statement: Although it may be demanded by institutional investors to lessen the short-term blow of a deflating economy, I consider the concept of a Starbucks Value Meal to be a disastrous step toward devaluation of the company’s brand equity.
Starbucks’ consumer loyalty is under attack from all angles right now: on the low-end of the consumer wealth spectrum, convenience drinkers have already left for the coffee offerings of their local c-store brand or dropped coffee altogether. On the upper-end, foodies and self-proclaimed coffee snobs abandoned Starbucks years ago for the offerings of Stumptown, Intelligentsia and a number of other regional micro-roaster / retailing businesses and independent specialty coffee shops nationwide. In the juicy middle, Starbucks is being flanked by McDonald’s, Dunkin’ and (believe it or not) the home kitchen for share of stomach.
I was unable to determine in 5 minutes of lazy online research if McDonald’s actually invented the concept of a combo meal or value meal (though, I believe it to be the case) — but if not, they certainly popularized it and it has been a central focus of their product strategy for decades.
Emulating McDonald’s is not the best long-term strategy for Starbucks to compete with McDonald’s. By admitting, essentially, that the McDonald’s combo meal model is better than Starbucks’ own menu and that the products are comparable, consumers are left to accept McDonald’s low cost option as a better value.
Accentuating Starbucks’ competitive strengths, namely a competency in specialty coffee, is the only way for the company to retain its consumer perception as a coffee specialist and emerge as the market leader once our economy gains its footing.
I disagree, that Starbucks has a competency in specialty coffee. Did it ever have one? In my opinion (and not just mine; as evidenced by the closure of the majority of Starbucks stores in Australia) “Starbucks Coffee” became an oxymoron a long time ago. And yes, were I a resident, or even just visiting North America, you could well find me in Stumptown or Intelligentsia or Cafe Vivace, but you certainly wouldn’t find me in Starbucks.
McDonald’s is far from a “great company.” But the company is positioned right for the biggest recession anyone alive can remember. It’s taking advantage of that position – and in the process will likely crush Starbucks. When people are ready for a cozy chair and soft jazz with their coffee they won’t want to stay with McDonald’s. But very likely Starbucks will have killed itself by inviting head-on competition with “value meals” that allows McDonald’s to crush them.
I agree that Starbucks long ago failed to be the leader in specialty coffee. For sure they failed when they began using pre-ground coffee to brew in their B&N shops. While they brought specialty coffee to the forefront, by following Peete’s, they are now circling down the drain. Their new moniker should be “The McDonald’s of Coffee”
I think that McDonald’s is now the “McDonald’s of Coffee.”