Will changes help perk up Starbucks?
Wednesday's annual meeting is expected to unveil big changes — perhaps a loyalty program, new espresso machines or a renewed emphasis on plain old drip coffee.
Seattle Times business reporter
For every coffee drinker who ever slurped from a Starbucks cup, there is an opinion about what the chain could do better.
Investors have ideas, too, after a yearlong stock slide and a drop in customer visits to U.S. stores.
Starbucks promised to announce big moves at its annual meeting on Wednesday, generating speculation about what its newly recrowned CEO, Howard Schultz, will unveil.
Since Schultz took the helm in January, Starbucks has been tracked in business circles with the fervor of the paparazzi following Britney Spears. Newspapers and TV stations breathed heavily over the Seattle company closing about 7,100 stores for three hours of barista retraining last month, and a test of $1 drip coffee at some Seattle-area stores made national news.
Headquarters workers have been shuffled and laid off, which pleased investors, but not enough to prevent shares from skidding last week to their lowest level in more than four years.
Plans are still in flux, but the latest word inside the company is that it will introduce a loyalty program to reward regular Starbucks Card customers and that it will change the automated espresso machines it uses. It will not return to manual machines as some coffee aficionados had hoped.
There's talk of baristas hand-scooping coffee into the grinder, rather than pouring from a bag. And the company will put a renewed focus on the quality of drip coffee by making sure it's freshly roasted and brewed.
The company's officials also want to introduce technology that would allow people to place orders from iPhones or other handheld devices, but that might not be part of this week's announcements.
Whatever Starbucks changes, it needs to appeal to people like Tabitha DeVuyst of Orlando, who has her pick of big chains serving espresso drinks. In Florida, Starbucks competes with Dunkin' Donuts and McDonald's, which is rolling out espresso drinks nationwide.
"I can come to McDonald's and get this caramel iced coffee for under $2," DeVuyst said. "And I'm not picky about where I go. I go to Dunkin', too."
As Starbucks' annual meeting looms, lower prices are popular on customer wish lists.
"What happened to $1 coffee?" asked Tammy Rayfield of McFarland, Wisc. "One-dollar tea, too. Don't forget the tea."
Some people want better coffee and food.
Natasha Alexandra, a musician in New York, loves the coffee at her local Starbucks but has trouble getting the right drink from other stores when she travels. Employees should be trained so "there are no major mistakes. I've had too many to count, and it's a bit annoying when you are paying $3 to $5 for a drink."
John Owens, an analyst at the research firm Morningstar, is pleased that warmed breakfast sandwiches are being phased out and wants new products that boost sales.
"Not salads and breakfast sandwiches," he clarifies. "Something that people would eat with coffee."
Angela Barr of Marquette, Mich., doesn't have issues with the menu as long as she can pronounce it.
"I usually order the — what's it called? — chai. Am I saying that right?" asked Barr. "I'm trying to pronounce it, and the 18-year-old cashier is looking at me like I'm dumb. A pronunciation key would be nice."
Gary Crowell of Mililani, Hawaii, thinks the Starbucks shares he bought a few years ago for about $31 could pull out of their current $17 rut if the company were to focus more on senior citizens.
"They're going to be a huge growth market," Crowell said. To reach them, he suggests Starbucks hire more seniors, offer another line of coffee that isn't as strong and turn up the heat in stores.
Some investors want more information, like where Starbucks will expand overseas as it shifts from rapid U.S. growth to opening more stores in foreign markets.
"I want to know where they're going to open and why," said James Walsh, an analyst at Coldstream Capital Management in Bellevue, which owns Starbucks shares as part of more than $1 billion it manages for clients.
Starbucks publicizes when it is going into new countries — including Argentina, Bulgaria, the Czech Republic and Portugal this year — but does not break out sales or profits for individual countries outside the U.S.
For many international travelers, the new focus on foreign markets is welcome.
Chocolate and Starbucks coffee were the first tastes of home for Kim Masten, a former Starbucks barista from Aberdeen who recently spent four months in Haiti.
"I've missed Starbucks so much," she said during a layover in Chicago.
Enzio Garayp of Brasília, Brazil, goes out of his way to visit Starbucks shops when he travels in the U.S. and Canada, and he wants one closer to home.
"There are a couple in São Paulo, and we're looking forward to getting them in Brasília," he said.
Melissa Allison: 206-464-3312 or email@example.com
Copyright © 2008 The Seattle Times Company
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