“You Win Because of the Coffee”

Another recent article in the New York Times describes a Starbucks closing down across the street from an indie coffee shop in Kansas City. For the first time the trend of Starbucks pushing out small shops seems to be reversing, and lagging sales and a stale formula has caused Howard Schultz to consider shutting down multiple stores in the US.

Analysts aren’t exactly lining up for a death pool, but there are legitimate concerns about Starbucks’ inability to deliver the experience its brochures promise. Baristas are little more than tollbooth operators now thanks to automatic machines, and even many of its proponents admit that Starbucks has lost what mystique it had, feeling more like a McDonald’s than a coffee house.

In short, the people high up in the chain (as opposed to the customers) are finally wending their way around to the obvious: aggressive expansion for its own sake isn’t a sustainable business model, especially when you’re dealing with a volatile commodity like coffee. So what should your model be?

The [Starbucks] store had a funereal air the other day as a handful of loyal customers sipped beverages and jotted goodbye notes in what amounted to a book of condolences.

Next door, the Broadway Cafe was bustling. “You win because of the coffee,” said Jon Cates, one of the owners.

Anyone over at Big Green listening?