hello everyone welcome back to case
studies with the biz doc this week it’s
Starbucks because they made an
announcement that I think is a case
study in itself they’re closing the
online store and we’re gonna take a look
at that and take a look at how they I
think are reacting to the wrong problem
and that’s the lesson this week reacting
to the wrong problem and sometimes
you’re you’re big you’re in a corner and
you may have no choice but the bold
people of business and bold leadership
usually find a way to act and drive the
company forward let’s go let’s a little
history on Starbucks you know I had an
IPO in 1992 and it went up like here and
Howard Schultz was out in 2000 after a
long run with the company he came back
in 2008 and go back in the archive here
at the value tainment
and look at the Starbucks a case study
we did it will give you a real look at
that because he back here was famous for
closing all the stores for one day to do
an amazing training so that you and I
would get the perfect Starbucks coffee
because he cared about the customer and
getting the perfect product every time
it was an incredible story of recovery
and focusing on the customer and he
deserves a lot of credit nonetheless he
comes back at that time and did that and
then rode you know ruck up through that
dip and everything that you’ll see in
that other case study and then rode it
back up until February of 2017 this year
he said I will no longer be the CEO I’m
gonna bring my CEO o
up to CEO and I’m going to be executive
chairman and I’m still going to be
involved and I’m gonna be working on a
thing called reserve Roasters so he’s
kind of still in the seat as a CEO or
leader the guy that’s worth over three
billion dollars or something by last
count is still in the chair doing it and
then this is where I want to look is
that for the last year this is what I
think Howard Schultz and Starbucks is
reacting to and the new CEO Johnson they
if you look at the last year they
Charlotte around 54 they had this whole
thing they peak they give like 60
something and then they end up at 54 so
if you’ve been asleep for a year where
you went to sleep they’re around 53 54
you woke up a year later they’re 53 54
so
over that year it’s kind of flat stock
price so whenever things are flat
there’s always pressure from Wall Street
whereas your growth coming from where
your earnings coming from where’s your
earnings per share you have a return to
the shareholder to think about are you
going to give a dividend chop chop give
us some answers because Wall Street is a
ferocious beast but that’s the price of
being a public company so now they’ve
got things going on here and they
suddenly rather than making forward
announcements like hey new version of
the iPad iPhone 8 iPhone 8 plus iPhone X
those are all forward announcements that
get made suddenly we start to listen
carefully and Starbucks is starting to
make flat or backwards announcements the
tea vana stores haven’t done so well so
we’re gonna close those oh okay yeah and
we’re gonna close our online store
people used to come to our online store
to buy things and now we’re gonna close
it to which I say well we wait wait a
minute wait a minute sure you can go to
Amazon or you can go to your grocery
store and buy like a big box of cure
eggs for your favorite Starbucks flavor
you can do a lot of things like that but
there was other things on the Starbucks
store like mugs and things like that and
importantly that’s also an opportunity
for Starbucks to gather what’s called
big data that’s data on you and me where
do we live how often do we buy what did
we buy we’re gathering data on that that
we can turn around and turn that into
marketing to help drive us back to maybe
to a physical Starbucks store where we
buy our favorite coffee well along with
this announcement you would think of
that would be good to have an online
store suddenly they’re like no we’re not
gonna operate the online store anymore
and they make this this amazing
statement comes out they said we cannot
guarantee the availability of any
product and stores but we know you will
find many choices to enjoy it’s like
wait a minute
so I have to go to the Starbucks store
my local Starbucks is really tiny and
they only have a few things other
Starbucks you see there’s this wall and
it’s enormous with all the things they
got up there so now they this company
that once upon a time he closed for a
day 4,000 locations or something to get
it right for you and me so
baristas know how to make the perfect
cup of coffee the perfect experience in
the wonderful Starbucks store with the
cool furniture and the music playing and
the lighting and the whole experience
they want to get it right and suddenly
that company that company is putting out
a note that says we cannot wait wait
wait wait all of that and you cannot you
cannot you cannot there’s only one word
for that and that is damn you’re the
guys that say you can you can you can
and now you’re saying you cannot I just
can’t roll with that let’s think about
this for a second so you say you can’t
guarantee the availability of any
particular product but we hope you find
which is something nice in the stores
that’s a limiting statement you know
there are stores that say come to our
store will help you find everything and
that used to be what online is all about
you’ve got infant near-infinite
inventory not constrained by a physical
space so you can offer everything and
apparently Starbucks doesn’t want to do
that but you know what there is a
company that wants to offer you
everything the everything store remember
these guys well they’re selling
Starbucks coffee too but Starbucks has
given up that opportunity to get that
good data and to run their own store and
extend the relationship with you and me
hey here’s an idea what if when I print
out my receipt from buying something
from the Starbucks online store there’s
a QR code or something at the bottom
that I can scan when I go into my local
Starbucks and get a discount on my next
cup of coffee
so my online purchase is rewarded with
an opportunity to get a deal in the
store because that’s where they want me
to be I’m sure people at Starbucks gotta
be thinking about these things but it
sure isn’t showing up and they start
singing The Wall Street tune hey same
store sales are like this top-line
growth we got some issues EPS these are
all things that point to this to the
stock if you get the company right and
you get the product right and you do the
right thing for the customer this
usually takes care of itself
a football coach Bill Walsh shoes to say
hey if the execution on the field is
well done and properly done with good
well coach players that are dedicated to
their position the score takes care of
itself well I feel the same way that
when you get it right like close the
store
trained everybody up the stock price
look the evidence is there he got
everybody focused on customer and
product and the price in the the stock
price took care of itself well now
they’re flat and suddenly they’re going
in Reverse
you know closing your online stores now
let’s think about it
Dunkin Donuts up in the Northeast you
know it’s a little bit different if you
go the Northeast Boston New York
Connecticut New Jersey that little
orange Dunkin is everywhere and if you
go to like Los Angeles San Francisco and
Seattle you know that the Starbucks
little green Starbucks is everywhere
well up there I think there’s some
things going on if you’re Dunkin seems
to understand Dunkin still has its
online store and I can still buy Dunkin
Donuts the big bag of coffee for
traditional coffee makers and by the way
that is the only coffee served at PHP
and here at Value tainment and I can
also get big boxes secured cups with my
favorite Duncan and Duncan here also has
a really cool subscription I can
actually subscribe to coffee like I like
the Dunkin medium roast the classic
medium Dunkin Donuts coffee that they
became legendary for I love that coffee
and I can get 24 of those sent to me
automatically once a month and the price
of those is right there and actually
maybe even a bit cheaper than I can find
it on Amazon so in other words just
because I’m at the Dunkin website
doesn’t mean I’m paying like full price
and maybe I could hunt around and find
some vendor selling it on Amazon and get
a discount it’s a subscription so
Duncan’s getting data on me but more
importantly they’re keeping this
relationship with me because they’re
sending me the box every month right
about the time that I want it and I fill
up my little basket there in the kitchen
and now I got my Dunkin Donuts Keurig
cups ready to go for the next month and
so let’s compare that I’m gonna think
about you and I’m gonna make
subscriptions for you and I’m gonna do
that versus we cannot guarantee you’ll
find what you want in the store but
there’ll be many things you can enjoy to
me that is I think we’re gonna look back
on this and we are going to see serious
issues with Starbucks going forward
about stepping in Reverse versus
stepping forward so let’s shift now and
do a little case study on stepping
forward we conducted some research here
at Value tainment and talked to a lot of
people reached
to them not scientific research of
thousands of surveys but some good
honest research and we came to this we
think that what Starbucks should be
thinking about is speed price and
product here’s what we mean the people
in the Pacific Northwest maybe they like
Pikes Peak roast because they have
coffee tastes that are kind of like wine
they want boldness and real smokiness to
it but if you go to the Midwest and you
go to the Northeast
most people tell you that that Pikes
Peak roast is stronger than they want
that bold medium Dunkin Donuts or a bold
medium coffee whether it’s Dunkin or not
is really what they want I like a little
sweetness in my coffee and I notice it
takes like three yellows remember yellow
pink or blue pick your sugar three
yellows just in a tall to knock it down
enough so I can taste just a little bit
of sweetness and that’s because that
Pikes Peak is so strong we think that
you know different strokes for different
folks and there’s some of that
adaptation around the nation in terms of
the product that should be there says
second is price McDonald’s and Dunkin
and coffee bean are highly competitive
now with Starbucks for your morning
coffee or an iced coffee and as a matter
of fact we did a little taste test and
people had the a couple iced coffee
beverages this one was a drive through
McDonald’s that they got for you in like
two minutes this one I had to wait for
it Starbucks guess what they were very
very similar well let me tell you 229
five bucks you can’t be similar when
that’s the that’s the difference now
let’s talk about well wait a minute tom
starbucks gives you an experience you
listen to the music you hang out maybe
you read some things on your phone and
at mcdonalds i’m just trying to get in
and out let me tell you at 8 a.m. when
everybody’s going to work everybody
wants to get in and out and that brings
us to speed I think Starbucks has missed
speed many years ago they installed the
bigger machines where they had two
baristas running but then what they
allowed people to do is order online and
I’ve noticed when I would go Starbucks
I’d be in line I’d be standing there my
name wouldn’t be called but I would
watch like eight drinks get made and put
right on the shelf where it’s like the
pickup for people ordering in the app so
you know
that was convenient if you have a nap
and you just run in and run out but it
actually impacts speed in the store so I
don’t have detailed statistics on that
but I haven’t yet to speak to somebody
in the last week while we were
researching this I said are you happy
with the speed at your normal Starbucks
at 7:45 8 8 15 were you going to morning
everybody said no they said actually
it’s slower than I remember yeah and I
can’t specifically tell you how many
minutes but it’s slower than I remember
and it’s kind of a drag and some of the
drive up Starbucks people said the line
was so long for cars that one of our
team my incredible producer gets out of
her car goes and walks up to the window
to orderic so there’s like a walk-up
window order here too and she might as
well have been in her car like 8th car
in line because she sat there on this
little bench in the outside at a walk-up
window like she’s buying tickets to the
movie waiting for a coffee so I think
there’s a whole set of things around
speed price and product that Starbucks
needs to evaluate and I don’t think the
issue is is necessarily what they think
it is is turning off your store backing
out of Teavana now if they’re not doing
well and they do that ok but there’s got
to be I’m waiting and I’m listening
carefully for Starbucks to talk about
what positive steps they’re doing going
forward and that is the mini case study
on Starbucks I think we should all watch
for is saying hey when are we going to
hear about some positive announcement
for the future rather than backward
announcements that start with we cannot
from a company who once upon a time
Howard Schultz says oh yes we can
and we’re gonna close the stores and
make sure everybody knows how to make it
yes we can we can give you a good
experience we can give you good coffee
we can get good training for people yes
we can now they have a statement that’s
up there saying we cannot we cannot
guarantee you can get what you want
really this is the same company well
maybe no coincidence
Schultz step back into the role of
executive chairman in February of this
year
maybe his absence is already being seen
certainly sounds like he’s still going
to be involved with these reserve
roastery they’re supposed to be super
high-end coffee shops but
I don’t know if you find yourself making
announcements or thinking about things
that are going backwards stop yourself
in your tracks whether you’re a small
start-up or you’re with an established
company that’s probably a sign that
you’re flat and things are worse than
you think and what you should be
thinking about is your next innovative
move to move the ball forward thank you
for watching and I need pillow X the
famous pillow X thank you for watching
value tainment and case studies with the
biz doc we are the number one channel on
the internet for entrepreneurial content
and until next time I’m Tom Mel’s
Worthen I hope I left you better than I
found you go get your favorite coffee [Music]
studies with the biz doc this week it’s
Starbucks because they made an
announcement that I think is a case
study in itself they’re closing the
online store and we’re gonna take a look
at that and take a look at how they I
think are reacting to the wrong problem
and that’s the lesson this week reacting
to the wrong problem and sometimes
you’re you’re big you’re in a corner and
you may have no choice but the bold
people of business and bold leadership
usually find a way to act and drive the
company forward let’s go let’s a little
history on Starbucks you know I had an
IPO in 1992 and it went up like here and
Howard Schultz was out in 2000 after a
long run with the company he came back
in 2008 and go back in the archive here
at the value tainment
and look at the Starbucks a case study
we did it will give you a real look at
that because he back here was famous for
closing all the stores for one day to do
an amazing training so that you and I
would get the perfect Starbucks coffee
because he cared about the customer and
getting the perfect product every time
it was an incredible story of recovery
and focusing on the customer and he
deserves a lot of credit nonetheless he
comes back at that time and did that and
then rode you know ruck up through that
dip and everything that you’ll see in
that other case study and then rode it
back up until February of 2017 this year
he said I will no longer be the CEO I’m
gonna bring my CEO o
up to CEO and I’m going to be executive
chairman and I’m still going to be
involved and I’m gonna be working on a
thing called reserve Roasters so he’s
kind of still in the seat as a CEO or
leader the guy that’s worth over three
billion dollars or something by last
count is still in the chair doing it and
then this is where I want to look is
that for the last year this is what I
think Howard Schultz and Starbucks is
reacting to and the new CEO Johnson they
if you look at the last year they
Charlotte around 54 they had this whole
thing they peak they give like 60
something and then they end up at 54 so
if you’ve been asleep for a year where
you went to sleep they’re around 53 54
you woke up a year later they’re 53 54
so
over that year it’s kind of flat stock
price so whenever things are flat
there’s always pressure from Wall Street
whereas your growth coming from where
your earnings coming from where’s your
earnings per share you have a return to
the shareholder to think about are you
going to give a dividend chop chop give
us some answers because Wall Street is a
ferocious beast but that’s the price of
being a public company so now they’ve
got things going on here and they
suddenly rather than making forward
announcements like hey new version of
the iPad iPhone 8 iPhone 8 plus iPhone X
those are all forward announcements that
get made suddenly we start to listen
carefully and Starbucks is starting to
make flat or backwards announcements the
tea vana stores haven’t done so well so
we’re gonna close those oh okay yeah and
we’re gonna close our online store
people used to come to our online store
to buy things and now we’re gonna close
it to which I say well we wait wait a
minute wait a minute sure you can go to
Amazon or you can go to your grocery
store and buy like a big box of cure
eggs for your favorite Starbucks flavor
you can do a lot of things like that but
there was other things on the Starbucks
store like mugs and things like that and
importantly that’s also an opportunity
for Starbucks to gather what’s called
big data that’s data on you and me where
do we live how often do we buy what did
we buy we’re gathering data on that that
we can turn around and turn that into
marketing to help drive us back to maybe
to a physical Starbucks store where we
buy our favorite coffee well along with
this announcement you would think of
that would be good to have an online
store suddenly they’re like no we’re not
gonna operate the online store anymore
and they make this this amazing
statement comes out they said we cannot
guarantee the availability of any
product and stores but we know you will
find many choices to enjoy it’s like
wait a minute
so I have to go to the Starbucks store
my local Starbucks is really tiny and
they only have a few things other
Starbucks you see there’s this wall and
it’s enormous with all the things they
got up there so now they this company
that once upon a time he closed for a
day 4,000 locations or something to get
it right for you and me so
baristas know how to make the perfect
cup of coffee the perfect experience in
the wonderful Starbucks store with the
cool furniture and the music playing and
the lighting and the whole experience
they want to get it right and suddenly
that company that company is putting out
a note that says we cannot wait wait
wait wait all of that and you cannot you
cannot you cannot there’s only one word
for that and that is damn you’re the
guys that say you can you can you can
and now you’re saying you cannot I just
can’t roll with that let’s think about
this for a second so you say you can’t
guarantee the availability of any
particular product but we hope you find
which is something nice in the stores
that’s a limiting statement you know
there are stores that say come to our
store will help you find everything and
that used to be what online is all about
you’ve got infant near-infinite
inventory not constrained by a physical
space so you can offer everything and
apparently Starbucks doesn’t want to do
that but you know what there is a
company that wants to offer you
everything the everything store remember
these guys well they’re selling
Starbucks coffee too but Starbucks has
given up that opportunity to get that
good data and to run their own store and
extend the relationship with you and me
hey here’s an idea what if when I print
out my receipt from buying something
from the Starbucks online store there’s
a QR code or something at the bottom
that I can scan when I go into my local
Starbucks and get a discount on my next
cup of coffee
so my online purchase is rewarded with
an opportunity to get a deal in the
store because that’s where they want me
to be I’m sure people at Starbucks gotta
be thinking about these things but it
sure isn’t showing up and they start
singing The Wall Street tune hey same
store sales are like this top-line
growth we got some issues EPS these are
all things that point to this to the
stock if you get the company right and
you get the product right and you do the
right thing for the customer this
usually takes care of itself
a football coach Bill Walsh shoes to say
hey if the execution on the field is
well done and properly done with good
well coach players that are dedicated to
their position the score takes care of
itself well I feel the same way that
when you get it right like close the
store
trained everybody up the stock price
look the evidence is there he got
everybody focused on customer and
product and the price in the the stock
price took care of itself well now
they’re flat and suddenly they’re going
in Reverse
you know closing your online stores now
let’s think about it
Dunkin Donuts up in the Northeast you
know it’s a little bit different if you
go the Northeast Boston New York
Connecticut New Jersey that little
orange Dunkin is everywhere and if you
go to like Los Angeles San Francisco and
Seattle you know that the Starbucks
little green Starbucks is everywhere
well up there I think there’s some
things going on if you’re Dunkin seems
to understand Dunkin still has its
online store and I can still buy Dunkin
Donuts the big bag of coffee for
traditional coffee makers and by the way
that is the only coffee served at PHP
and here at Value tainment and I can
also get big boxes secured cups with my
favorite Duncan and Duncan here also has
a really cool subscription I can
actually subscribe to coffee like I like
the Dunkin medium roast the classic
medium Dunkin Donuts coffee that they
became legendary for I love that coffee
and I can get 24 of those sent to me
automatically once a month and the price
of those is right there and actually
maybe even a bit cheaper than I can find
it on Amazon so in other words just
because I’m at the Dunkin website
doesn’t mean I’m paying like full price
and maybe I could hunt around and find
some vendor selling it on Amazon and get
a discount it’s a subscription so
Duncan’s getting data on me but more
importantly they’re keeping this
relationship with me because they’re
sending me the box every month right
about the time that I want it and I fill
up my little basket there in the kitchen
and now I got my Dunkin Donuts Keurig
cups ready to go for the next month and
so let’s compare that I’m gonna think
about you and I’m gonna make
subscriptions for you and I’m gonna do
that versus we cannot guarantee you’ll
find what you want in the store but
there’ll be many things you can enjoy to
me that is I think we’re gonna look back
on this and we are going to see serious
issues with Starbucks going forward
about stepping in Reverse versus
stepping forward so let’s shift now and
do a little case study on stepping
forward we conducted some research here
at Value tainment and talked to a lot of
people reached
to them not scientific research of
thousands of surveys but some good
honest research and we came to this we
think that what Starbucks should be
thinking about is speed price and
product here’s what we mean the people
in the Pacific Northwest maybe they like
Pikes Peak roast because they have
coffee tastes that are kind of like wine
they want boldness and real smokiness to
it but if you go to the Midwest and you
go to the Northeast
most people tell you that that Pikes
Peak roast is stronger than they want
that bold medium Dunkin Donuts or a bold
medium coffee whether it’s Dunkin or not
is really what they want I like a little
sweetness in my coffee and I notice it
takes like three yellows remember yellow
pink or blue pick your sugar three
yellows just in a tall to knock it down
enough so I can taste just a little bit
of sweetness and that’s because that
Pikes Peak is so strong we think that
you know different strokes for different
folks and there’s some of that
adaptation around the nation in terms of
the product that should be there says
second is price McDonald’s and Dunkin
and coffee bean are highly competitive
now with Starbucks for your morning
coffee or an iced coffee and as a matter
of fact we did a little taste test and
people had the a couple iced coffee
beverages this one was a drive through
McDonald’s that they got for you in like
two minutes this one I had to wait for
it Starbucks guess what they were very
very similar well let me tell you 229
five bucks you can’t be similar when
that’s the that’s the difference now
let’s talk about well wait a minute tom
starbucks gives you an experience you
listen to the music you hang out maybe
you read some things on your phone and
at mcdonalds i’m just trying to get in
and out let me tell you at 8 a.m. when
everybody’s going to work everybody
wants to get in and out and that brings
us to speed I think Starbucks has missed
speed many years ago they installed the
bigger machines where they had two
baristas running but then what they
allowed people to do is order online and
I’ve noticed when I would go Starbucks
I’d be in line I’d be standing there my
name wouldn’t be called but I would
watch like eight drinks get made and put
right on the shelf where it’s like the
pickup for people ordering in the app so
you know
that was convenient if you have a nap
and you just run in and run out but it
actually impacts speed in the store so I
don’t have detailed statistics on that
but I haven’t yet to speak to somebody
in the last week while we were
researching this I said are you happy
with the speed at your normal Starbucks
at 7:45 8 8 15 were you going to morning
everybody said no they said actually
it’s slower than I remember yeah and I
can’t specifically tell you how many
minutes but it’s slower than I remember
and it’s kind of a drag and some of the
drive up Starbucks people said the line
was so long for cars that one of our
team my incredible producer gets out of
her car goes and walks up to the window
to orderic so there’s like a walk-up
window order here too and she might as
well have been in her car like 8th car
in line because she sat there on this
little bench in the outside at a walk-up
window like she’s buying tickets to the
movie waiting for a coffee so I think
there’s a whole set of things around
speed price and product that Starbucks
needs to evaluate and I don’t think the
issue is is necessarily what they think
it is is turning off your store backing
out of Teavana now if they’re not doing
well and they do that ok but there’s got
to be I’m waiting and I’m listening
carefully for Starbucks to talk about
what positive steps they’re doing going
forward and that is the mini case study
on Starbucks I think we should all watch
for is saying hey when are we going to
hear about some positive announcement
for the future rather than backward
announcements that start with we cannot
from a company who once upon a time
Howard Schultz says oh yes we can
and we’re gonna close the stores and
make sure everybody knows how to make it
yes we can we can give you a good
experience we can give you good coffee
we can get good training for people yes
we can now they have a statement that’s
up there saying we cannot we cannot
guarantee you can get what you want
really this is the same company well
maybe no coincidence
Schultz step back into the role of
executive chairman in February of this
year
maybe his absence is already being seen
certainly sounds like he’s still going
to be involved with these reserve
roastery they’re supposed to be super
high-end coffee shops but
I don’t know if you find yourself making
announcements or thinking about things
that are going backwards stop yourself
in your tracks whether you’re a small
start-up or you’re with an established
company that’s probably a sign that
you’re flat and things are worse than
you think and what you should be
thinking about is your next innovative
move to move the ball forward thank you
for watching and I need pillow X the
famous pillow X thank you for watching
value tainment and case studies with the
biz doc we are the number one channel on
the internet for entrepreneurial content
and until next time I’m Tom Mel’s
Worthen I hope I left you better than I
found you go get your favorite coffee [Music]
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