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Published March 21, 2008 11:38 pm - The Seattle Times
SEATTLE -- For every coffee drinker who ever slurped from a Starbucks cup, there is an opi...


Will changes help perk up Starbucks?


The Norman Transcript

The Seattle Times

SEATTLE -- For every coffee drinker who ever slurped from a Starbucks cup, there is an opinion about what the chain could do better.

Investors have ideas, too, after a yearlong stock slide and a drop in customer visits to U.S. stores.

Starbucks promised to announce big moves at its annual meeting on Wednesday, generating speculation about what its newly recrowned CEO, Howard Schultz, will unveil.

Since Schultz took the helm in January, Starbucks has been tracked in business circles with the fervor of the paparazzi following Britney Spears. Newspapers and TV stations breathed heavily over the Seattle company closing about 7,100 stores for three hours of barista retraining last month, and a test of $1 drip coffee at some Seattle-area stores made national news.

Headquarters workers have been shuffled and laid off, which pleased investors, but not enough to prevent shares from skidding last week to their lowest level in more than four years.

Plans are still in flux, but the latest word inside the company is that it will introduce a loyalty program to reward regular Starbucks Card customers and that it will change the automated espresso machines it uses. It will not return to manual machines as some coffee aficionados had hoped.

There's talk of baristas hand-scooping coffee into the grinder, rather than pouring from a bag. And the company will put a renewed focus on the quality of drip coffee by making sure it's freshly roasted and brewed.

The company's officials also want to introduce technology that would allow people to place orders from iPhones or other handheld devices, but that might not be part of this week's announcements.

Whatever Starbucks changes, it needs to appeal to people like Tabitha DeVuyst of Orlando, Fla., who has her pick of big chains serving espresso drinks. In Florida, Starbucks competes with Dunkin' Donuts and McDonald's, which is rolling out espresso drinks nationwide.

"I can come to McDonald's and get this caramel iced coffee for under $2," DeVuyst said. "And I'm not picky about where I go. I go to Dunkin', too."

Gary Crowell of Mililani, Hawaii, thinks the Starbucks shares he bought a few years ago for about $31 could pull out of their current $17 rut if the company were to focus more on senior citizens.

"They're going to be a huge growth market," Crowell said. To reach them, he suggests Starbucks hire more seniors, offer another line of coffee that isn't as strong and turn up the heat in stores.

Some investors want more information, like where Starbucks will expand overseas as it shifts from rapid U.S. growth to opening more stores in foreign markets.

"I want to know where they're going to open and why," said James Walsh, an analyst at Coldstream Capital Management in Bellevue, which owns Starbucks shares as part of more than $1 billion it manages for clients.



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