Starbucks as a Third Place or Just Another Coffee Shop

Three consecutive quarters of disappointing results. Three consecutive quarters of plummeting same-store sales. Two consecutive quarters of declining earnings. An obvious downturn in stocks.

But let’s be real — this is no big deal. As Howard Schultz, the longtime leader of Starbucks said:

Ask any public-company CEO and they will tell you that “a miss” is virtually inevitable, even at the best-managed, fastest-growing firms.

It’s not the miss that matters. It’s what comes next.

When I saw that post on LinkedIn he shot out recently, expressing his concern with the current state of business, I thought of the time Starbucks positioned itself along the concept of a “Third place” — not home, not school or work, but a key space where community thrived. Here’s what you would picture when you think of Starbucks — a welcoming place for coffee drinkers, with comfy seatings, jazz music and the aroma of freshly brewed coffee. Friendly baristas who hand-write your name on your drink order; some even remember your regular go-to if you’re a frequent there!

But this notion is changing with many long-time customers largely echoing what Howards mentioned in his post.

Going to Starbucks isn’t what it used to be.
And the brand itself isn’t what it used to mean.

How is Starbucks becoming less and less of a ‘third-place’?

When Schultz intended for Starbucks to be a ‘third place’ for people, he meant for it be “a place beyond home and work where people could gather, relax and talk.”

But over the past decade, comfy chairs have largely disappeared. And as if the intention is to push people back to their homes and offices, they’ve been replaced with hard wooden ones.

It’s also somewhat of a treasure hunt to find sockets to plug in computers or phones.

Once upon a time, baristas wrote your name on your cup (although misspelt) and sometimes even included compliments or pick-me-ups. But now we have printed stickers slapped on your cup.

Did this get rid of the human touch from its famously handcrafted beverages?

We’ve moved on from the rich aroma of coffee beans roasting and grinding. Instead, we now have ready-to-use sealed packages!

Commoditising much?

Oh, and not to mention how the company added drive-thrus at many suburban locations. Great, now you’re totally splitting the baristas’ focus, making wait times longer, and hogging space that could’ve made the in-store vibe way better. Sure, this increased sales. But it also decreased the in-shop experience.

Now some Starbucks stores removed all the chairs (both comfy and hard) to focus on mobile orders. But standing in those queues, bumping elbows with other grab-and-go customers, hearing and seeing them go in and out for the entire time, we try to enjoy time away from home and work!

“Starbucks may call it “experiential convenience” but we consider that an oxymoron; convenience is about time well saved and experience is about time well spent.”
~ an excerpt from the Harvard Business Review

The Starbucks Workforce Tensions

The Starbucks workforce tensions are not be kept aside — after consistently ranking as one of the best places to work, it has completely disappeared from the charts since 2016.

Starbucks employees have been vocal about their working conditions where they’ve shed light on the missing link between performance metrics aimed at sales volume and those focused on the quality of connections with customers.

Reggie Borges, a Starbucks spokesperson, kept denying that “connection scores” affect how many staffing hours a store gets, saying those are based on things like foot traffic and sales volume. But he did mention that customer connection scores show what the company values for its workers, whom they call partners.

Honestly though, I’ve got a mixed take on this approach because this totally changes how customers and service employees interact, making the latter act more like supervisors. This cannot be bias-proof either since it might accidentally be led by customers’ gender and racial biases. Now we don’t want that to be the basis for how Starbucks managers manage their teams, do we?

All things said, Starbucks still has time to shake off the whole ‘just another coffee shop’ vibe and go back to its experiential course.

I’m totally on the same page with Schultz that the path forward begins with revisiting what made Starbucks so successful in the first place.

Nothing tops the vibe of baristas shouting orders and making those real connections. That’s what gave these spots that neighbourhood coffee shop feel! Sure, you might get a weird misspelling on your cup or an extra pump of syrup you didn’t ask for. But honestly, those little ‘mistakes’ are what make the Starbucks experience feel so authentically human!

Starbucks knows that coffee is all about connection, not just cash — and maybe now it needs a leader who can embody that.

P.S.: Just a heads up, this analysis mostly looks at Starbucks’s U.S. stores, where these trends and changes have been most evident.