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What's up with Starbucks?

Vikrant Duggal
Vikrant Duggal
• 2 min read

Swapping Saturday Spotlights with a different topics today: Starbucks.

Once a day I drive by my local Starbucks and even though many things outside of Atlanta are open and have resumed business, my Starbucks has not gone the way of other cafes, restaurants, or bars. Yes, I can order and pick up, but the Starbucks value proposition was the third place, not the place to pick up an overpriced coffee.

If I drive ten minutes further I can enjoy the indoor, or outdoor seating of the local coffee shop, Cupanion Kitchen & Coffee.

I've realized now how important the social component of going to Starbucks was. But, what now? In the last 14 months my household Starbucks spend is 0. The core value prop as the 3rd place has mostly disappeared. Here outside of Atlanta it is the only cafe in my area that doesn’t allow you to sit down inside. The coffee product is terrible in most cases.

So what is the value proposition in the U.S. today? It feels like it is now convenience.

They not only sit on consumer cash via the SBux card, but they use a number of tools (I’m an investor in one) that allows them to get deep customer insight via the app specifically. Starbucks sits on more than $1.5 billion via their card. 85% of U.S. banks have less than $1 billion in assets. Go figure!

Here's what I'm curious about.

  • With China - where are they in their coffee adoption cycle? (I heard they partnered with Alibaba)
  • What’s next for SBux loyalty program? It was already strong. Where does it go from here?
  • How will they tackle sustainability and their single use plastic cup problem? That was core to their brand, but less and less people are going to want to walk around with those, right?
  • Where else is coffee consumption early and on the rise? India? Russia? Will they make a move into AFrica?
  • Bezos always speaks of positive cash flow with Amazon? (I just read Invent & Wander) How does SBUX do?
  • It’s a strong brand, where else can they throw it around? Can they partner with other global brands to drive more sales?
  • Coca-Cola launched a coffee product, will the new retail product have alcohol? Would they open a new kind of storefront concept for adults only?
  • I grew up in Seattle and I loved their Roastery retail product - I know that was a side project for Howard. Going high end could work in the new world where people are moving into new cities and spreading their wealth as consumers.
  • I’m not a fan of their sugary diary-based seasonal products, but when they come up with new pure coffee products (like their Nitro Cold Brews) I’ve given it a try in the past. They’ve done well and expanded that product line.

Maybe the growth is now all in international markets.

Let's see.

Daily