Case Study of Starbucks

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Increasing Starbucks’ Customer Usage and
Improving Its Poor Customer Experience

Problem Statement

The purpose of this paper is to examine how Starbucks can increase current customer usage as well as maintain customer expectations in terms of customer satisfaction and service. Our team will examine Starbucks’ senior vice president of administration, Christine Day’s plans to invest an additional $40 million annually into the company’s 4,500 stores by adding 20 hours of labor a week (Moon & Quelch, 2003).


In what seems like almost overnight, Starbucks has reached the same ironic status in the Unites States as Coca Cola and McDonalds as a corporate dynasty. Starbucks became an upscale cultural phenomenon and turned into the dominant specialty coffee brand in America by waking up the once-sleepy coffee industry. Starbucks made coffee unique and interesting and introduced many premium coffees domestically as well as internationally. In 1990, only 3% of all coffee sold in the United States was priced at a premium and in 2000, 40% of coffee was sold at premium prices (Vishwanath, 2000). These statistics keep increasing and are increasing because of Starbucks exposure and growth to the United States; however over the past three months, Starbucks stock prices have taken a fall due to poor customer experience and the slow speed of service. Surveys have shown a trend of poor customer satisfaction between the months of April through July 2007. These surveys show that customers perceive Starbucks to be more concerned with making money and opening stores rather than creating that unique and personal Starbucks experience for every customer. With customers feeling less satisfied with their service and treatment, Starbucks’ revenues are not yet starting to decrease but their views in their consumers’ eyes and their marks at the stock exchange are, indeed, going downhill. Christine Day, Starbucks senior vice president, believes “we need to bring service time down to the three minute level in all of our stores, regardless of the time of day. If we do this we’ll not only increase customer satisfaction and build stronger long-term relationships with our customers, but we’ll also improve our customer throughput.” In her research, she concluded that moving each store closer to the $20,000 level in terms of weekly sales could be proposed by relaxing the labor-hour controls in the stores and adding an additional 20 hours of labor a week, per store, at a cost of an extra $40 million per year. It was anticipated that the change would improve speed of service and thereby increase customer satisfaction. We believe an express lane would help speed up service tremendously. This express lane would be for black coffee only while another line would be put into place for the specialty drinks. This express lane would decrease manpower on black coffee and increase manpower where it is needed: with frappuccino beverages and other specialty drinks. By creating this express lane, customers who go to Starbucks to purchase black coffee will not have to wait in line for the customers ahead of them to pick out their eccentric drinks. This “black coffee only” express lane could be manned by one barista who could still give the customers the unique Starbucks experience but could also speed up the service for the “easier” customers. With this express lane in place, Starbucks could easily encourage the sale of Store Value Cards (SVC). This means the customer could place their order, have their card swiped quickly, and pick up their order in a matter of a minute, all improving the payment system, customer usage, customer satisfaction, and faster service. In our research, we will examine the costs and benefits of Christine Day’s plan compared to our plan. Our research objective is to show that there is a demand for an express lane and that Starbucks needs to put into effect a better...
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