Starbucks and Insanity (UPDATE)

Here, in a nutshell is Starbucks (SBUX) problem.

So, Starbucks has a policy that it knows is injuring customers, yet refuses to change the policy. I guess them recognizing $5 coffee in an economic malaise won’t sell isn’t going to happen anytime soon.

Arthur F Licata, an attorney in Boston has a case against Starbucks that make you questions the thought process in Seattle.

Starbuck has a policy that when you hand them your cup (the travel mugs) to be filled, they do not put the top back on the 185 degree coffee that sits inside. What is happening? People are getting burned. In Licata’s case, his client was burned when the cup the barrista placed on the counter began to tip. In an effort to catch it, the barrista ended up shoving the cup and its contents into the face of his client who’s eyes were burned to the point she no longer has any peripheral vision. What stuck Licata is that through his investigation, this is a common occurrence. Whether it be employees spilling on customers, customers spilling on themselves or customers spilling on other customers, it is happening daily, yet the policy remains.

I know some people are going to scream “McDonalds coffee lawsuit”. I will simply say those who mock that suit have no knowledge of the details of it or the injuries suffered by the old woman or McDonalds role in them. I will also say that McDonalds altered it policy, to date, Starbucks has not.

When I buy coffee at Starbucks and they make it for me, they place the top on.

What does this illustrate? Arrogance. Howard Schultz in a recent interview called the coffee at McDonald’s (MCD) and Dunkin’ Donuts, both of whom are serving more people every day, “swill”. I have never heard a CEO so insulting of another company’s product before, especially when their results are lapping his.

Despite store traffic declining for over a year, Starbucks only recently acknowledged its prices were affecting its business may made at least token efforts to make its products more affordable.

Both episodes go to a mindset. “We do what we do”. If you think we are too expensive or like the other coffee, you just aren’t cultured or are to cheap. We don’t put cap on your travel mug, if you get burned, too bad.

Call it hubris, stubbornness, arrogance or whatever you want, just don’t call it common sense.

UPDATE:
Here is an article about advertising companies walking away from a “very difficult client”. One agency’s head was actually a friend of Howard Schultz

Disclosure (“none” means no position):Long MCD, none
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