Howard Schultz, the once again CEO of Starbucks has lots of
plans
for revitalizing the company, whose shares have dropped 40% in the past year. With most consumers believing that the U.S. is a recession because of rising fuel and food costs and the housing market crash, people are foregoing their $5 lattes. And that's hurting Starbucks. Schultz lays out his plans for weathering the storm:
On Wednesday, Schultz said Starbucks' plan offered solutions to "reaffirm our coffee authority" and make the chain feel less corporate. For instance, Baristas will be able to see customers over new low machines.
A new coffee blend is scheduled for an April debut, and a Web site, www.mystarbucksidea.com, will allow customers to submit ideas to the company and to vote on them.
Under the loyalty program due to begin in mid-April, consumers will purchase their coffee, but extras like caramel sauce or soy milk will be free, Starbucks said.
Schultz also apologized for Starbucks' recent performance.
"I humbly recognize and share both your concern and your disappointment in how the company has performed and how that has affected your investment in Starbucks," Schultz told investors. "I promise you this will not stand."
The decline in U.S. customer traffic in November was the first in Starbucks history.
Cash-strapped consumers are cutting back on Starbucks $3 to $5 coffee drinks as the costs of gasoline and other essentials rise, while competitors nibble away at different segments of the $25 billion-plus U.S. specialty coffee market that Starbucks carved out.
We like the idea of a loyalty card and free extras in our drinks. And new coffees could be good: we're obsessed with the Gazebo blend that is only offered in the summer. It makes the best iced coffee, ever. But mostly it's the price of coffee beans and fuel that is killing Starbucks. We wonder what the upper price ceiling is for consumers who drink lattes: will they pay $6? $10? We have a feeling that $5 was the breaking point for many people, but we'll see as the year goes on. As for us, it just depends on 1) how desperate we are for coffee and 2) how far away we are from home. Sometimes you just have to say, "Get me a latte -- I don't care what it costs!"
