Has Starbucks reached Market Saturation?

The second financial quarter has been good to Starbucks Corp. with an 18 percent increase in net income.  There has also been a 7 percent increase in global same-store sales.  Company representatives have also indicated that it expects to open 1,000 stores this year, up from the previous goal of 800.

 

Of the new stores, 500 units are slated to be opened in the Americas, a region that includes the U.S., Latin America, and Canada.  Currently there are 12,570 units located in the territory – about 100 more than were available during the same quarter last year.  During the economic downturn, Starbucks has closed nearly 1,000 stores in the U.S. which didn’t perform well, but things have obviously turned around.

 

A Look Towards Progress

 

Company chair, Howard Schultz reports that U.S. locations performed “extraordinarily well” last year.  “Any thought of saturation” is premature, and the company believes that it will be able to maintain its plan to open the cited number of units.  Additionally, in Latin American countries such as Brazil where Starbucks currently operates fewer than 100 units, there is plenty of room for growth.

 

China’s Market is Where the Growth Is

 

The area where Starbucks expects the highest rate of growth is China.  Starbucks intends to open 400 units in the China Asia Pacific region this year.  Some store sales increased 20 percent for the quarter for the seventh consecutive time in China where half of the new locations are planned.

 

Increased sales of new products such as the K-Cup packages, Blonde Roasts, and fruit based drinks have helped produce a positive picture.  The chain will be introducing Evolution Fresh juices and a line of energy drinks called Refreshers in the coming months, all of which are designed to increase customer appeal to non-coffee drinkers.

 

Europe’s Market in Decline

 

While Europe has continued to be a challenge for Starbucks, the company continues to focus its efforts on achieving a turnaround.  Nevertheless, the sales increases in the UK and France were not enough to overcome decreases in other areas in the region.

Japan As A Coffee Mecca?

So it turns out that, at least according to this report in the New York Times, your barista has it all wrong. The best coffee in the world is not necessarily to be had in Italy or France. Instead, Japan is a world leader in production of quality coffee products and coffee makers. Japan you ask? Yep – Japan. Here’s what you need to know:

An Alternative for Your Coffee Drinking Diners

Standard professional cappuccino makers can run you a cool $6,500. That’s quite a little bit of money for the privilege of getting a quality cup of coffee.

And while your diners may very well demand their espresso, offering them the alternative of Japanese coffee could easily create a unique offering that only you would be alone in offering (or at least, you’d probably be the first, since Japanese coffee making techniques still aren’t particularly well known in this country).

No Need for Fancy Equipment

The other thing that makes this so interesting is that you really don’t have to have lots of fancy equipment in order to make Japanese style coffee. All the equipment required can be had for around $100 for a home kit.

We imagine professional kits would cost a bit more, but given the very low cost of entry, it may be worthwhile to consider investing in this option.

Slow Brewing is Key

The key to making Japanese style coffee (and really any kind of coffee if you want to make it well) is slow brewing, something we sometimes have a problem with in our country, which is always in a hurry and on the go. However, for a fine dining restaurant, this may work perfectly for your diners.

Marketing Will be Key to Success

Of course, if you do want to try offering Japanese style coffee at your establishment, you’re going to want to do some marketing of it and label it as something exotic and new. Whatever you do, don’t tell your customers that it’s so cheap to make!

Spiked Coffee is In

In the movie Some Like it Hot, starring Marilyn Monroe, Tony Curtis and Jack Lemmon, the proprietors of the club shown in the beginning of the movie serve coffee in their illegal speakeasy. The time was prohibition and the way they would “officially” make the claim to be alcohol-free was to serve coffee. Of course the coffee was spiked and was offered in such playful varieties as scotch coffee, sour mash coffee and the like.

While that was fiction, it turns out that real life really does follow fiction. In addition to the issue of alcohol being mixed with caffeinated power drinks such as Red Bull that we discussed a few weeks ago, it turns out that many restaurants are now bringing customers in (if they have a liquor license) by serving spiked coffee.

The drinks are not intended to hide the alcohol from the police (given that prohibition ended long ago), but new types of coffee cocktails are now being prepared in some bars and restaurants to bring a new edge to traditional drinks.

Not Easy to Do

It turns out however that mixing coffee with alcohol, even if you are aware of the issues (as we reported previously – it can be dangerous, especially for younger drinkers) is not a very easy thing to do. Try mixing up some sweet liquor with a cup of coffee and you’ll end up with a goopy mess rather than a drink which will entice customers to keep coming back for more.

Experimentation is the Key

As with creating new dishes, your barista and or bartender will need to get together with you and do some experimenting. They’ll need to work to create a series of drinks that not only taste good but that actually look good as well. Keep playing around with the ingredients and taste test them with friends and relatives before you start offering them on the menu.

Iced and Hot

Both iced coffee drinks and hot drinks will work in this concept. It’s a good idea to work on different ideas and not just stick to the cold drinks we might assume we’d create for this kind of cocktail. You should also consider both sweet and spiced drinks in order to come up with the optimum range of different drinks for your restaurant.

The Coffee Comeback: Why Breakfast has Become a Meal to Eat Outside the Home

Coffee, in spite of the advice of budget experts who recommend that people drink it at home on the cheap is not only doing well, but is actually showing an increase in sales value.

That’s because more people than ever are going out for breakfast – a meal traditionally underserved by most restaurant chains since it was assumed that the first meal of the day would be consumed at home before racing off to work.

Getting to Work Earlier Means Getting a Decent Breakfast is Harder than Ever

The reasons for the trend are clear: in spite of the fact that the Great Recession has been pushing people to try to save money, people are working even harder to make sure they can keep their jobs so that they don’t have to worry about saving money (at least not as much).

That means more workers than ever are grabbing an early breakfast out before heading into the office, just so they can show the boss how dedicated they are to the cause and thus avoid being the next person to be laid off.

What the “Coffee Breakfast” Means for You

Increasing the selection of morning foods and of course coffee can only be a good thing for most restaurant owners. As more workers decide to eat out, those who get in early on this trend will see the most benefit as people start to stick with their usual routine.

Keep it Fast

The one key component that restaurateurs should be keeping in mind however is that speed is of the essence. Breakfast meals out are not likely to be considered a luxury where people are sitting down for a slow breakfast. Instead, expect customers to be in and out briskly, demanding fast service and possibly even office delivery.

You can also improve your bottom line by offering online ordering where a meal can be ordered through the Internet and then delivered directly to the office for the person to eat a their desk.

Perceived Downturn in Customer Service

A recent survey of 6,800 Americans reveals a troubling trend. A majority of respondents believe that the customer service they receive while dining out is becoming progressively worse.

Consumer Confidence Shaky
Bloomberg Businessweek reported that consumer confidence is somewhat fragile as few expect their incomes to increase within the next year and many consumers are concerned about future employment. As a result, consumer spending has been restrained. In fact, according to Bloomberg Businessweek, sales at stores like Taco Bell, Pizza Hut and KFC opened within the last year by YUM have remained unchanged.

Increased Expectations Lead to Disappointment
A survey conducted by Empahtica, Incorporated revealed that 55.2% of consumers within the US believe that customer service within the restaurant industry is on the decline.

According to RestaurantBriefing.com Empahtic’s Executive Vice President of Client Services, Gary Edwards speculates that this may be due to increased expectations on the part of consumers who are cash strapped and therefore dining out less frequently.

RestaurantBriefing.com quotes Edwards as saying, “With less discretionary spending, people aren’t going out as frequently, and when they do, they have heightened expectations. Even if service levels aren’t truly declining, restaurants maybe evaluated more harshly. There is simply more of a negative sentiment among consumers.”

Service More Important than Food
Meeting those heightened service expectations is a must for restaurateurs as a full 20% of consumers who responded to the Empahica survey stated that good customer service is more important to them than good food. According to the Empathica survey, when consumers visit a favorite restaurant and receive poor service 25% said they do not return to that establishment again. Even worse, they tell others not to dine there as well.

Edwards cautions against simply throwing labor dollars at the issue and instead advises solid training coupled with reinforcing quality service expectations. Edwards explains that working with staff to emphasize those service opportunities which make a difference in the consumers overall experience is essential.

Cooling Customers during Hot Summers with Creative Coffee Mixology

As spring heats up and summer approaches the minds of mixologists and restaurateurs turn toward the best, most creative options for keeping their clientele cool throughout the hot, summer months. An inventive few are leveraging our nation’s coffee obsession by combining the caffeinated beverage with cool and refreshing liquids.

Cold-Brew Coffee
According to a tasting conducted by the crew at Chicago’s Metropolis Coffee Company a cold-brew coffee method known as the Toddy, was voted the hands down favorite of the various brewing methods sampled. This brew method was named after its inventor Todd Simpson, a chemical engineer who, in 1964, pioneered the cold-brew coffee method in order to reduce the bitter, acidic qualities associated with hot coffee.

The Toddy method calls for cold-brewing the beans over a period of twelve to twenty-four hours in order to achieve a smooth, mellow concentrate that can be refrigerated for several weeks. It’s this cold-brew coffee method which allows baristas to serve their customers a fresh tasting cup o’Joe every time simply by adding water or milk to the rich, concentrated liquid.

Coffee: It’s not Just for Baristas Anymore
It’s not just baristas who are serving cold-brewed coffee, mixologists too are coming up with their own creative concoctions. For example, at Chicago’s the Wit Hotel mixologist Jonny Abens uses Van Gogh espresso vodka to spike iced espresso for his café pomme di hollande drink. In San Francisco, California Scott Beattie came up with the espresso martini by adding vodka to the dark, caffeinated liquid.

Arabica Beans or Bust
Regardless of whether it’s hot espresso or some cold version of the beverage, using high quality Arabica beans is a must. Failing to do so will result in an inferior coffee drinking experience. According Giorgio Milos, an Italian Master Barista with illycaffe, even the novice connoisseur will appreciate the flavors available only in high quality Arabic coffee beans.