One Quick Question: Andrew Hetzel
Restaurants and Institutions, 3/1/2009

Seattle-based Starbucks announced to investors at the end of January that it planned to introduce breakfast pairings at “attractive” prices.

Given that the move represents Starbucks’ first foray into value-meal territory, R&I asked Andrew Hetzel, founder of Kamuela, Hawaii-based coffee-industry consultancy Cafemakers:

Q: Is offering a value meal a tactic that can work for Starbucks, and if not, what sort of strategy can?

A: I really think the approach is disastrous in the long-term. It’s probably a short-term fix that will appease the institutional investors. I see it as eroding the brand equity that Starbucks worked so hard to build to be identified as a specialty purveyor.

Wall Street’s continual hunger for growth is what has placed this business in peril today. Starbucks has taken what was a specialty brand and tried to make it a mass consumer item. It’s difficult to have something that’s exclusive and make it available to everybody.

They’re sending a really mixed message, and it has definitely dampened the enthusiasm of their loyal customer groups. The core Starbucks consumer is disenfranchised. There’s a type of consumer that’s very opportunistic. That type of consumer is not going to be the one going out of their way to go into your store day after day.

The big question is, what do they want to become? If Starbucks wants to become a fast-food purveyor that’s recognized as such, they can make some changes … and continue on the path they’ve started on. If they want to be a specialty-coffee business and keep that brand cachet … I see that they’re really going to have to go private.

It has to be a long-term solution, and less of a shotgun approach. Focus on what you’re in a position to do best, which is serve specialty coffee that the restaurant chains largely cannot replicate.