Ask HN: Why doesn't Starbucks beat local coffee shops? Majority of coffee fans say their local coffee shops make better coffee than starbucks. If that's so, why doesn't starbucks, with all it's money and resources become better than local coffee shops. What is it missing? |
https://www.fastcompany.com/887990/starbucks-third-place-and...
"Starbucks goal is to become the Third Place in our daily lives. (i.e. Home, Work and Starbucks) “We want to provide all the comforts of your home and office. You can sit in a nice chair, talk on your phone, look out the window, surf the web… oh, and drink coffee too,” said Kelly. (Notice she put “drink coffee” last???)"
A friend of mine was high up in marketing at Starbucks in NY ~15-20 years ago, and her explanation to me back then was "What we supply to people is a comfortable and familiar place to sit and meet up with people. 'Coffee' is just the way we take money off people for that." This was an extremely valuable thing in NY specifically, where lots of even otherwise "wealthy" people lived in small and/or shared places - where inviting people into their homes socially or for small/contracting type business was way less attractive than meeting people at Starbucks, and a welcoming and familiar place to sit for an hour or two with your laptop or notepad is a really nice break from your tiny little NY apartment. "Better coffee" does not make that more valuable. Ubiquity and standardisation makes that more valuable. The coffee only needs to be "good enough" that people wont choose other, less familiar and potentially less welcoming feeling places to do an hour or two's work or meet up with people.
This also means in places where quality local coffeeshops start to become alternatives for “hangout spaces”, Starbucks may offer more intricate coffee options and reluctantly compete on that front. However, that’s rare.
Some of the true equivalents are chain coffeeshops of South Korea. They serve equivalently average-to-bad coffee.
Of note, during recent lockdown measures in Seoul, these franchised coffeeshops (including Starbucks) were singled out among all food and drink establishments as the only ones forbidden from letting customers sit in at all. I suspect it’s because they are effectively the “third place” for many people, so the government considered them a major vector.
Some branches more or less shut down as a result, since take-outs are just not worth it with that quality of coffee.
Now I've been to SF and Peet's was excellent and there are similarly excellent coffee shops in many city centers. But where i live and work, Starbucks tends to be pretty much a cut above much else conveniently available
If you're not plugged into the specialty coffee world, you'll think places like Peets are "excellent". Next time you go to SF, try Ritual and Blue Bottle and Sightglass (and my last visit there was 5-ish years back, so I'm certainly out of date with newer recommendations, and I seem to recall Blue Bottle "sold out" and may not be genuinely specialty grade coffee any more...)
25-30% of my rss feed is coffee-related, probably 20% of my Youtube subscriptions are coffee-related. The far end of the excellent coffee bell curve isn't _that_ hard to find, but here in Sydney, for example, many of the top 10-20 places are good enough that they're coffee destinations in their own right, and are not paying for high foot traffic locations in city centers. I've got four great roasters fairly nearby, all pretty much in the middle of light industrial hell. They're in between nondescript warehouses and bearing shops and panel beaters and down the street from new loft conversions selling the "hipster scene" they've partly created (along with the breweries and live music venue and motorcycle workshops nearby). People get in their cars or get a cab/Uber to go there because Hazel and Claire roast there, or because Dan is the head barista, or because Sasa trains everyone personally, or because Reuben sources all the green beans himself.
Go find _those_ places in your city, then tell us what you think of Peets and Starbucks... And maybe you won't care. Not eveybody does, and that's fine. Maybe it'll ruin you for life, and you'll never be able to drink mediocre coffee again - and you might think that's wonderful of you might hate me for it... But go find out...
http://www.daleisphere.com/the-intertwined-history-of-peets-...
"To this day Peet’s remains a largely a regional player though it has expanded to a few other U.S. states. It still makes the best chain-store coffee I’ve ever had – far surpassing the coffee made available at Starbucks"
This seems like something of an exaggeration. Peet's seems marginally better than Starbucks. Maybe.
Premise: A) many people prefer other coffee B) Starbucks has the resources to make high quality coffee
Assumption: Starbucks values high quality coffee as it's own end or needs to have good coffee too compete in the marketplace
Reality : Starbucks does not care about coffee quality as it's own end, only about profits, and they judge their current quality level to be the correct tradeoff for maximizing profits.
When you think an entity that is extremely successful at something is failing to understand their core competency, it is usually you who is failing to understand their goals or incentives. People fall into this trap with their understanding of the motivations of politicians as well as businesses all the time.
They've seriously struggled in Australia-there's a few stores here and there-mostly confined to large shopping centres, but they're not popular and I believe they were down to single-digit number of stores a few years ago.
Hands-down best coffee I had in the Oz, though, was in Perth (Northbridge area). There was a tiny hole in the wall coffee shop next to a spice market that was amazing.
If the rest of the Oz is like either of those 2 locales, I can see why S-bux would fail.
But Starbucks has its place. I stopped at a few in Japan to give the family a chance to sit down and not feel rushed to keep moving. You can charge your phone or your laptop and relax.
A local coffee shop optimises along a very parameters (let's say taste only) at the expense of scale, cost and other parameters. A Starbucks has to optimise quite a few other parameters but each of these parameters won't be at the levels that local coffee shops do. Remember, another thing a listed company like SBUX has to optimise is shareholder wealth so that constraint drives the rest of the optimisations.
On a related note, refer this[0] article by Joel on quality and scale. Here's a sampler:
"That’s because McDonald’s real secret sauce is its huge operations manual, describing in stunning detail the exact procedure that every franchisee must follow in creating a Big Mac. If a Big Mac hamburger is fried for 37 seconds in Anchorage, Alaska, it will be fried for 37 seconds in Singapore – not 36, not 38. To make a Big Mac you just follow the damn rules."
[0] https://www.joelonsoftware.com/2001/01/18/big-macs-vs-the-na...
People do a similar thing with tea. In the US tea is mostly drank iced with a crap load of sugar.
So if you're trying to sell as much coffee as possible, you'll be serving it mostly with cream and tons of sweetener anyways so its pointless to worry so much about quality coffee. With volume you also have to worry about getting people in an out as quickly as possible. Most of the boutique coffee shops will be making single pour brews that take forever to make. You simply can't dedicate that much time per cup if you have a line of people inside and a drive thru to manage.
Also, "better" coffee is subjective. Buy local and shunning big corporations probably impact people's attitudes more about local coffee shops than the flavor of the coffee.
And that factor is important to many people. Maybe surprisingly so to people who don't get that particular aspect. Example: a few years ago I was a consultant for a while, and I traveled a lot for work. Lots of time on airplanes and in airports and a lot of dragging myself off of airplanes late at night, jonesing for a cup of coffee, or dragging myself into the airport late, jonesing for coffee. And then exploring a new city on the first day, after dragging myself out of bed, jonesing for a cup of coffee. In all three cases, I knew that if I saw a Starbucks I could walk in and have a perfectly predictable experience.
And on those occasions that was exactly what I wanted. I didn't care about finding the "best cup of coffee in Portland" or "the best coffee shop in Chicago", etc. And I didn't have time to run around sampling all these little boutique places, hoping for some spiritual / transcendent experience.
Sure, the hardcore coffee snobs are gritting their teeth right now, and that's OK. What I want from a coffee shop (at times) and what you want are two different things. And that's OK.
That's not to say that there isn't a place for wandering around, exploring all the unique local coffee shops in whatever town/city you happen to be in. The point is just that the ubiquity and predictability of Starbucks is objectively a Good Thing to a certain group of people.
Starbucks, as a large business, needs to worry about creating a consistent product which appeals to a wide range of consumers which have an expectation of what their coffee will taste like from week to week.
Smaller shops often cater to subcultures looking for ‘interesting’ coffee, so they often source characterful single-origin coffees and don’t worry about their week-to-week consistency so much, since their customer base will often accept this inconsistency in exchange for the extra character they’ll get.
I’d thus also argue that Starbucks coffee isn’t necessarily worse (even though I count among the independent-coffee shop fans), but that it is a different drink altogether.
Coffee is not unique in this kind of specialty fragmentation. It exists in craft beer, single malt whiskies etc.
I'd argue the inconsistency is Part of the character
They are wrong. Are there any blind taste tests? It's harder than wine to test, but should be possible.
But the premise is incorrect anyway.
Enjoyment of food and drink is tied to way more than taste. History matters. Sight matters. The story matters. Variety matters. Routine matters. The people matter.
The trick is to get the coffee backhouse, without suspicion or losing all the extra things that matter and then use pods -
30% of Michelin-starred restaurants choose Nespresso machines https://www.grubstreet.com/2013/03/nespresso-sold-at-micheli...
1. Sourcing quality beans is costly. 2. Majority of the people don't care.
For 1 - For a single coffee shop, quality of beans is not the most significant part of price. They can increase ~10c per cup and get much better quality of coffee[0]. However, this might be tough as Starbucks need to source same beans across the world.
For 2 - Following 1, if you only need to increase 10c, and get significantly better coffee, why won't you do it? You're already the leader in 3rd spaces, why not be a leader in coffee too, for a much better moat?
When I go to my local coffee shop, I feel a sense of warmth and community. A bit of the same sense I get, when I travel to my mother's house for Christmas.
No amount of money and resources can buy that.
I think in Australia they have upped their game on the coffee front to survive (many Starbucks closed here years ago), but at the same time it is probably easier to hire baristas due to the coffee culture. They are not the best but I think a Starbucks in Australia would be a lot better than a UK one for example in terms of the coffee quality.
Starbucks does not compete with local coffee shops, neither with premium chains. They target different markets, serve different needs and got different business models
When do I patronise Starbucks? When I get tired of working from wherever I happen to work from and while on the road. Also I use it as a hangout spots for social and business purposes
Where they have to compete as a proper coffeeshop, they fail miserably (Israel) or struggle big time (Australia)
No matter where I am driving in Europe, I know I can step off the highway and find a McDonalds with air conditioning, food, ice cream and Wi-Fi. I know I can use their touch screen terminals and pay with my card, regardless of the local language or currency. It's a meal for when you don't want to think about having a meal. It's logistically convenient.
I suspect Starbucks is the same.
Food doesn’t scale like that. It’s the same with restaurants.
These are my experiences from around the world.
To achieve that consistency, they tend to over-roast their beans -- to the everlasting chagrin of coffee lovers everywhere.
On a similar note, dunkin serves light roasts. I'd presume they also want consistency?
Presumably they over-roast it because the most popular drinks have a lot of sugars and creams (Frappuccinos, etc.) so the coffee needs to be stronger. So, it’s not the over-roasting that makes it consistent, but the fact that every branch roasts it the same way.
Dunkin on the other hand seems to make a serious portion of their income from those boxes and their light roast black coffee, so they maintain consistency with a shorter roast time.
Of course most coffee places have various beans these days and this doesn’t always apply.
If you want something fancy, specialized, or something that isn't designed to appeal to the lowest common denominator, then you go to a specialty / local place.
Because their strategy is to be easy, convenient, familiar, safe, etc. The food/coffee is pretty bad, but you know what you get. This apparently is what the masses want. Predictable experience.
McDonald's food is bad in the same way that Coke is bad: it's made by a giant corporation, it's highly processed and contains questionable additives, it's readily available and heavily advertised, and consuming a lot of it will make you overweight and very unhealthy (see Super Size Me.) On the other hand, you can actually lose weight and potentially improve your lab numbers if you eat a low-calorie McDonald's diet (see The McDonald's Diet.)
Starbucks ha no soul, and their drinks are targeted at an American audience who don't know better. As a European I'd rather give my money to espresso bars doing good filter coffee than spend a minute standing in line at a Starbucks. I've been remote working for years and many coffee shops in my home town treat me like furniture by now, since I often worked 4-5 hours daily from their tables, rotating my favourite places. I am good friends with some owners and many many baristas, so I get a bit of a special treatment when I'm there.
Perhaps even deeper. Starbucks knows it's customers do not care much about coffee quality.
Similar to Apple. Apple know it's customers don't care much about being able to pick and choose the graphics cards or ram modules in their computers, and they don't care much about removable batteries or microSD cards or headphone jacks on their phones. iPhones have "good enough" battery life/internal storage/headphone options, and Apple are totally happy to walk away from the small demographic of potential customers for who those things are showstoppers.
I am not a Starbucks customer. I know by first name the people who roasted the beans for pretty much all the coffee I've drunk in the last decade or more. I have 5-6 local roaster I buy from and I almost totally avoid cafes that aren't theirs (or who buy beans from one of them). My most regular "cafe" sells no food at all (Coffee Alchemy in Marrickville, for any Sydneysiders...) - only espresso based and pourover brewed coffee. (Until a few years back your only option was full cream cows milk or black.) When traveling I'll go and say Hi to people like Eileen at Ritual or Jeremy at Four Barrel (back before he turned out to be a creep). When I first visited Portland, I had a list of 5-6 places I wanted to visit based on recommendations and reviews, which grew to 12-15 places as I chatted with the baristas at the first few places. On the third day there I was at Coava for the first time, and when I ordered the girl behind the machine said "Oh, you're the crazy Australian with 'the list'!" The baristas there all drink together and talk about the customers :-) That was a super fun trip.
If _I_ were to start a food/beverage business, I'd be insane to target _me_, when the demographic of "people who are OK so long as the coffee isn't awful", and who might choose to spend money at my cafes for other reasons (like I've got one on 3 out of every 4 street corners in Manhattan, for example, or because I've got comfortable chairs and putlets to keep laptops charged) is so many orders of magnitude bigger.
They have absolutely EXPLODED in number of locations in CA since acquisition though, so they're not really my first search if I'm in the center of a Metropolis.