In December, Starbucks set out ambitious new plans for the direction of the global coffee giant over the next five years. The unveiling of its five-year strategic plan followed yet another record quarter (and year) of growth, but the corporation isn’t resting on its laurels. By 2021, Starbucks wants to increase revenue by 10 per cent – and its international estate by 12,000 outlets. With such zest for renewed growth, can the smaller and independent coffee shop operators compete with Starbucks?
The corporation has a financial and marketing clout that few can match, admittedly. Starbucks claims to offer “industry-leading innovation” that “creates further separation” from the rest of the competition in the coffee industry. One segment at the heart of its latest growth plans are millennial consumers. New upscale ‘Starbucks Reserve’ stores come in, for example, will target that specific market with the promise of $10 coffee. The concept may not have arrived on this side of the Atlantic yet, but it soon will.
It’s not going to be all about the coffee at Starbucks Reserve stores either. A new Italian food partner, Princi, was brought on board by Starbucks last summer. Howard Schultz, the outgoing CEO of Starbucks, said at the time: “Our Roasteries and Starbucks Reserve stores will further transform – and elevate – the Starbucks Experience we deliver to our customers, and are laying the foundation for our next wave of profitable, global growth.”
Starbucks’ Competition? It’s Your Coffee Shop…
One concern is the impact this will have on all the coffee shops competing with Starbucks for a share of market. Starbucks CFO Scott Maw, however, told the UBS Global Consumer and Retail Conference on 9 March that what the coffee giant had “acknowledged… is the collective group of independent coffee shops out there, they are doing a lot of what Starbucks has been so good at for so long. It’s that third-place environment, it’s a comfortable place to be, it’s an up-levelled coffee experience.”
Maw also revealed how the “ubiquity” of the brand is a challenge for Starbucks to overcome. It contrasts with the creativity and innovation of start-up operators; the businesses that illustrate how your coffee shop business can survive and thrive. After all, we can take Dublin as a useful example of the Starbucks effect on local coffee shops. As the 21st Starbucks outlet launched in the Irish capital in April last year, the Daily Edge garnered the thoughts of independent coffee shops across the city. The verdict was broadly positive, perhaps even bullish – even if there is an issue of big chains driving up city centre rents.
That “ubiquity”, however, present some lasting opportunities for your business. As Starbucks and other high street chains become so familiar and so widespread, consumers will look towards independent operators to provide a more local, more authentic coffee shop experience. Instead of fearing the prospect of yet more Starbucks opening up, it could pay exciting dividends to embrace it; to be the definitive ‘alternative’ in your local area, and to provide an experience that is a world apart from those multi-site operators. As Scott Maw describes it, be the “up-levelled coffee experience” that your customers crave.
How to Compete with Starbucks and Other Coffee Giants
To make sure your coffee shop business is in the best shape to compete with Starbucks and the other high street coffee giants, an irresistible cup of Joe is a no-brainer. A study from Assembly Coffee uncovers the core principles worth sticking to when running your business – and a focus on taste is right up there. It won’t surprise you to learn, either, that poor tasting coffee is quite a big turn off for consumers. So, you need the beans, machines and everything else in-between to ensure you uphold the highest standards of taste and service.
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