Last week, Starbucks announced that after 4pm they would serve wine and various evening menu items. But this move makes me uncomfortable based on two factors.
#1. The history of big brands branching out beyond their usual offerings is not always good. History has shown us that branching out from your core offering can be a huge mistake. Take for instance Microsoft’s WebTV that never passed the 1 Million subscribers mark? Or the Smith and Wesson (yes the gun makers) mountain bike? Or Harley Davidson Perfume? I could go on and on, but I think you get the point.
#2. As a gold card member at Starbucks, I am worried. I don’t want to see loads of drunken, loud people in the store. I can go plenty of other places to see that. Having said this, I rarely go for a coffee in the evening so it could work. I can see how changing from caffeine to wine makes sense in the landscape of what customers drink at different times of day.
The new menu items for Starbuck’s after 4pm menu will include bacon wrapped dates and truffle mac n’cheese. There is even going to be chocolate fondue. The idea is that the coffee bar transitions into a wine bar, your baristas to sommeliers, and your morning pit stop into evening happy hour hangout.
Starbucks tested this concept in four major markets so far. Starting with a few locations in Seattle, Los Angeles, Chicago and Atlanta, the response was good enough that they intend to continue the roll out over the next several years. They did find that this model was better when it was located near other restaurants and theaters. And from a common sense perspective that model does follow a certain logic.
What I do like about the concept is that Starbucks is responding to a market opportunity. They saw that sales were down at that time period and figured out a way to give customers a reason to come back. This is not that surprising since I feel like Starbucks does tend to have their customers in mind for most of their decisions in the most part, although the difference between what Customers think of Starbuck in the US and UK is very different.
A couple of years ago, one of our team wrote a post on Starbucks that talked about how it was, “The Destination Starbucks.” In it he spoke to the manager of the Rembrandt Square Starbucks in Amsterdam. They learned that Starbucks always considers the customer experience when they design a space and then have metrics that they use to measure if the experience is working. From making sure that particular Starbucks store had a hip feel and local flavor, they created a social space that got lots of repeat traffic, even though it was in the tourist zone.
But I also could argue that because they are trying to find growth that they are getting too far from the focus of their brand with the new menu. I would caution them, as I did to all organizations in my post, “A Message to Wall Street” which providing a disappointing customer experience in a pursuit of Wall Street accolades can end up being a greedy move that harms the brand in the long run.
Wal-Mart is a good example of this. Their customer satisfaction plummeted when they cut costs by reducing workforce at the store, which helped the stock price. The result is now customers can’t find inventory on the shelves or anyone to help them just before they get in a 20-minute line to check out with the things they could find. Sometimes the moves that organizations make to meet the goals of the stockholder in the short-term make big problems for the stock price in the long-term.
Generally, as far as Starbucks goes I am still unsure that the move will work for them. I worry that as it has been with many companies, the constant push for growth means they may lose what it was that made them successful in the first place. But as I mentioned before, I am not exactly beating a path to their door after 4pm. I will be watching to see if this idea ends up on the 25 Biggest Product Flops of All Time next year…next to Bic Underpants (Yup) and Colgate Entrees! (Yes these were real products once). If you want to see more great and amusing examples of product risks that didn’t pay off, check out this article on dailyfinance.com.
What do you think? Will you go to Starbucks for wine and bacon wrapped dates some evening? Is this a good move for the brand?
This has all the flop potential – yes, as big as Bic Underpants and Colgate Entrees, and New Coke as well – as when Pillsbury thought it would be a great idea to sell a line of Pillsbury Cookware. Their customers just found the concept unacceptable and incongruous. .
If Denny’s and Friendly’s, or your local McDonald’s, Burger King, Chick-Fil-A, KFC, or Wendy’s, started making beer available at dinner, what impact would that have on their family business in the evening, not to mention their reputation and image? So, it wouldn’t happen. Maybe the Starbucks customer is thought to be a little more sophisticated, leading the company’s senior management to believe that alcoholic beverages after 4 p.m. might build sales, and not be inconsistent with their coffee cafe concept, but this has potential failure and social media backlash draped all over it.