Starbucks Losing Core Customers?

Shane over at NoiseFreeInveting.com emailed me his post and I think he makes good and possibly devastating points for Starbucks (SBUX).

Shane says:
“All of the sudden Starbucks experience felt different. My drink tasted different. The romance of my morning coffee was gone. Of course, chemically my drink had the same composition. (Often however the milk tasted burnt – a by-product of preheating milk that has to stay warm longer while it waits for a customer.)

If you remove the romance, Starbucks reverts to selling a simple, easily substitutable, commodity. After a few mornings of unromantic experiences, I wondered why I was forking out money for a latte that tasted so blah and I stopped going.

It took a few years, but I’ve recently found a great little coffee shop that makes the best latte’s in town. The company offer fresh hand-measured (and timed) espresso shots, individually heated milk regardless of how many customers are in line, and fancy designs on their latte’s. They offer the romance I was missing.

Money and speed never played a factor in my decision – Starbucks fails to understand that. As evidence I submit a recent ad campaign. The promise? Better Coffee. Faster.

The company is now openly admitting they are selling a commodity. In the place of romance they are offering operational excellence. Starbucks only thinks they sell better coffee. True coffee lovers — the ones that can tell you where the beans are from just by sipping the coffee — avoid the company.”

Now, if Shane is right then things may be worse for Starbucks than even I think. If my thesis that coffee is a simple commodity then price rules hold true, Starbucks can reverse its current free fall by becoming more “value oriented”. But, if Shane’s is the predominant factor for the current situation, then it means Starbucks is not just losing the cost conscious consumer but it core one also.

That would be the worst news of all…

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Disclosure (“none” means no position):None