Starbucks in Trouble; What to Do?

By Roger L. Simon

Starbucks is evidently into hard times, its version anyway.

The first quarter report of the seemingly ubiquitous coffee house chain was filled with bad news from what’s been called a “surprise decline in same-store sales.” It also “slashed its full-year forecast.”

The result was the company’s shares fell 17 percent with their market value down to a paltry $82.8 billion.

What’s the explanation? It can’t be that I have always preferred Peet’s. (Okay, kidding.)

In truth, I have never been a fan of Starbucks’s coffee, avoiding it except occasionally on trips when there are no nearby alternatives.

I do, however, admire its founder and now ex-CEO Howard Schultz’s marketing acumen for taking the old Greenwich Village coffee shop, cleaning it up and making it less scary for the public while preserving just enough bohemian chic to make people think they were doing something cool by buying his calorie-laden Frappuccinos.

But why now is this model failing?

The real reason for Starbucks’s decline is the obvious one. In the oft-quoted words of the late journalist H. L. Mencken, “It’s about the money.”

In this day and age, fewer people want to or even are able to pay that much for a cup of Joe, especially since there are so many other choices without Starbucks’s relatively high prices for their luxury concoctions.

This is also true now not only of the working class but also of the bourgeoisie, who frequently have the machinery to make their own caramel macchiatos or whatever at home for considerably less than they would pay at one of their stores.

The travails of Starbucks may not be overly important to most of us, but they are yet another indication of where we are as a country today. The division between the haves and have-nots that began during the pandemic is not reversing. It seems to be increasing.

“A new report from the International Coffee Organization reveals an alarming situation in the coffee market. Robusta coffee prices have skyrocketed to a 45-year high, a clear indication of the severity of the supply crunch and the rampant bean hoarding that is gripping the world’s largest bean producer.

“The London-brd group, in their monthly report, delivered a sobering update. ICO’s gauge of wholesale prices, brd on spot prices across key markets, surged 17% in April to the highest level since 1979. The report also highlighted Vietnam’s struggles in its coffee belt, enduring several years of poor harvests.”

I know it shouldn’t, but this concerns me even more than the price of sweet light crude.

So I am going to have to endure the high cost of coffee, Starbucks or no. You should as well. We all should.

Here are my principles and, as Groucho Marx famously said, “If you don’t like them, well, I have others.”

While not quite as obsessive as the baristas, we have done some of this at home and now produce coffee that seems at least as good as Starbucks’s (though perhaps not Peet’s).

What we miss, of course, is the coffee house atmosphere, the place you can go and schmooze with a friend over a cup or pretend you are writing the Great American Novel on your laptop. (I have tried the latter and can attest it was a complete failure. Eventually, I packed up the laptop and went home to work.)

This lack of atmosphere is what Mr. Schultz may have meant by the “customer experience” problem in his LinkedIn statement. Whatever the case, you’re not likely to find that in a chain. And maybe the coffee shop experience itself is something of a yesteryear phenomenon. If so, we’re missing something. The secret, I think, to a great coffee house these days would be to find one with the right simpatico crowd. Everyone has his or her own definition of that. It just takes research.

First published at the Epoch Times