>Starbucks, here’s how you get into the outsourcing business

>Hello Starbucks. You have made enormous success of the past fifteen years and have become an integral part of 21st century global cultural fabric. You have a store on the Great Wall of China, introduce new words to us like Yirgacheffe and are a bit like Viagra and The Simpsons (you aren’t technically the best but you’re easier to find and we have so much fun with you – we don’t care). We’d come to you eight-days-a-week if we could. You are to be applauded.

You have reached somewhat of an impasse though. You aren’t growing much; many of your stores are busy only at lunchtime and your brand doesn’t make us think – “that’s progressive!” anymore. Free Wifi/Foursquare deals, exclusive album sales and instant coffee will not get you those 40,000 stores you wanted a few years back. Your mantra of “A Starbucks on every corner” remains a good one. We know it’s tough out there but you just need to stick with your plan; maybe be a little bolder. Here’s what you do:

1) Recognise that you have to diversify. Your huge rent bill will surely eventually cripple you. You either need to dramatically cut costs (how? [Given your locations]), increase demand for coffee (how? [Given everyone drinks it anyway) or expand into new markets.
a. In 2008, the FM market was approximately $846BN, with approximately half ($426BN) apportioned to internal services meaning that the outsourced FM market in 2008 was worth around $420BN. It is surprisingly difficult to obtain free global branded coffee shop market sizes but for the UK at least, this is a $2.5BN market (2009). Let’s assume the UK is 5% of the global market (pretty standard), leaving a total market of $50BN. This means the FM market is roughly ten-times the size of the branded coffee-shop market.
2) Build more stores. Very roughly and taking the UK as a case in point; you have 750 stores and there are 30M people employed in the UK. With a few (contentious) assumptions, if you increased the number of stores tenfold (7,500), each store would need to accommodate just 200 people (1.5M/7,500). Obviously, it would need to take place over some years. A burgeoning senior citizen population, increased contract working and home-working will reduce the market, making the figure more manageable longer term.
a. Assume half actually work in an office (the rest in retail stores, hospitals, lumberjacks, machinists in plants, plumbers, nurses etc.). This takes the potential market down to 15M.
b. Assume half work for big name organisations that will want to maintain their own premises (taking it down to 7M – basically the SME market).
c. Assume half of those actually work in an office at any given time (the rest visiting clients, training, sick/vacation, travelling, WFH etc.) taking it down to 3M).
d. Assume you lose half the remaining people to other coffee-shops as the market is quite fragmented at the lower-end (taking it down to 1.5M).
3) Use your Starbucks card. At the moment this is used as a store card (arguably faster than paying otherwise). Put an RFID chip in and use it to track peoples employing organisations, access times and automatically bill the organisations according. You can hugely undercut existing FM services if you open-up this new revenue stream. You also expand your coffee market.
4) Build meeting rooms. Organisations need secure ad-hoc meeting rooms (HR, competitive, strategic discussions etc.). Let’s assume all new stores have one. These would need to be empty by default i.e. not having coffee drinkers in them and controlled by an online booking system. Let’s also put sophisticated video conferencing facilities in each one. Of course meetings are going to overrun and the people outside waiting for the next slot are going to have to either play nice/assertively claim their room but this happens in offices already. You might want to partner with others for larger, scheduled meetings.
5) Deploy IT Infrastructure. Cyber-cafes may be on the wane as cheap mobile devices rise but you would need to pop Internet terminals in your stores to mop up those without laptops at any given point. The shift to cloud-based computing means organisations won’t need development/file/application servers because they won’t have IT departments. Each store is also going to need a couple of wireless printer/scanner/copiers.
6) Go stealth. To avoid monstrously over-selling your brand, you are going to need to expand your stealth experiments on a wider scale. Focus individual stores on the areas they are in (creative/business/education etc.). Maybe change the decor to fit-in with local murals on the walls. It may be healthy to engender some competition between them. There would clearly need to be more variety in (interior and exterior) store design.
7) Forget the Baristas. Everyone knows this isn’t a skilled job. Stop pretending it is. It’s not like they spend years learning the correct Frappuchino for the chocolate Starbucks coin customers eat. They’re a bit like your Starbucks cards – over-engineered. Do give them training but make this in basic IT services in addition to working the coffee machine. They should need to know how to reboot the router, connect to it and any of the various wireless devices you have in your store from most portable devices, reset passwords, create accounts and escalate issues – that sort of thing. Ultimately, they’ll thank you for it. Future employers will place much more emphasis on IT service skills.
8) Culture shift slightly.
a. “Third-place”. This internal marketing needs to go. Yes – there’s a place for a safe haven, a “third place”, that place outside of work and home where you know that you will be greeted with a smile and some respect. This is more than a coffee shop though. It is now a hackneyed term anyway. It was used at the Playstation 2 launch and is employed by countless gyms over the world. Is it really harder to create another market than get a good chunk of one (or both) of the existing ones?
b. Seat-saving. This needs to go. Someone cannot come in, sit down on one of your sofas and then “save” seats around them; dissuading potential users as their “friends are coming”. This prevents people from using stores for more than a quick coffee i.e. to work. Hot-desks are essential. It has to be first-come-first-served. Subtle advertising cues should be able to make this culturally frowned upon so it ceases to be an inhibitor.
c. Table Service. Your service isn’t great at lunchtimes. Queues can be large. People on laptops are dissuaded from leaving their laptop but they still want a coffee. Your new Trenta sizes may address this issue (slightly) but your smaller competitors offer table service for the same price.
d. Enhance security. You cannot have hoodies/Hells Angels/gypsies/beggars etc. associating with Senior Executives (can you?). You are likely going to need a security guard in most stores to gently dissuade them. Can’t they all do double-duty as Baristas too though? Security Barista? IT Barista? Table-service Barista? They can be more Pokémon than Borg.
e. Get out of food. You are not known for your food. Stay with chilled things that go well with hot coffee e.g. muffins, cakes, chocolates, biscotti etc. The hot breakfast sandwiches, wraps and salads all need to go. They take too long, are odorous, other brands do them better, people don’t want them in their office and will also want a break from you (their workplace) to go get them anyway. Get a food partner if you must and link it to your Starbucks card. We can work it out.

You have the cultural and economic reach to become our workplace. This isn’t something you can do quickly. It’s a goal over the next fifteen years. You can choose to move up from being an escape to being a destination. That journey will mean you need to take a leap and recognise that you’re big enough right now and that you’ll have missed service elements along the way (but that others will fill-in and contribute to the new eco-system). It may also mean you concentrate on the back-office, lose a bit of your élan/put your brand on the back-burner and cancel that order for corporation T-shirts.

A little like those faceless East-India type holding companies that keep going for hundreds of years. That’s OK though. You have certainly let your face grow long of late but to paraphrase The Beatles further; you are the coffee man. They are the coffee men. You are the water-cooler.


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