What does giving up alcohol say about Starbucks?

Discussion
Photos: Starbucks
Jan 11, 2017
George Anderson

Starbucks is reportedly putting an end to its “Evenings” program that brought beer and wine sales to more than 400 of its stores. This is not the first time the company has dropped a program or concept after concluding it wasn’t going to deliver the results needed, and it quite likely isn’t the last as the coffee giant shows a willingness to invest in new ideas and quickly move on if they do not work out.

The “Evenings” program initially began with a test in 2010 and climbed to 439 locations, according to a Seattle Times report. Starbucks was banking on alcoholic beverages and some meal changes on its menu to help increase traffic to its shops at night. In the end, however, the chain concluded it was better served adding new menu items to drive sales during lunch than going after business later in the day. The company plans to keep beer and wine on the menu of its high-end Reserve and Roastery stores.

Last year, Starbucks announced the closing of its Teavana tea bars, a sister concept to the brand’s namesake stores, when management concluded it could not achieve the same type of impact accomplished with its coffee shops.

In 2015, the company closed all of its La Boulange locations and converted them to Starbucks after the chain, which was acquired in 2012, failed to meet its goals.

Last month, Starbucks CEO Howard Schultz said he would step back from the day-to-day activities of running the company to concentrate on developing its Reserve and Roastery concepts. Kevin Johnson, president and chief operating officer of Starbucks, will assume CEO duties in April.

DISCUSSION QUESTIONS: What do you make of Starbucks’ decision to end the sale of beer and wine in its namesake coffee shops across the U.S.? Do you see other ways the chain could increase its evening-hours business? Should the company’s failures be a matter of concern for stakeholders?

Braintrust
"From personal observation and experience, most people visiting Starbucks at night are there to study or to do work, not to socialize."

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13 Comments on "What does giving up alcohol say about Starbucks?"

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Meaghan Brophy
BrainTrust

From personal observation and experience, most people visiting Starbucks at night are there to study or to do work, not to socialize. Starbucks should focus on creating an evening environment that is conducive to productivity. Alcohol doesn’t help that.

Lee Peterson
BrainTrust

Good move. It was “brand wrong” to begin with. Also, from an operations perspective, it’s one thing to manage a bunch of happily chirping, caffeinated morning birds and a whole other process managing scores of buzzed-up night-timers. If you’ve ever worked in a bar, you know what I’m talking about!

Max Goldberg
BrainTrust

The beer and wine program did not deliver the desired results, so Starbucks decided to drop the program. Starbucks has always been an innovative leader. I salute the company for its constant willingness to try new concepts, much like Amazon. Only through innovation, which requires constant trial, testing and sometimes error, will companies and industries grow.

Mark Ryski
BrainTrust

Part of what makes a company like Starbucks successful is the discipline to terminate programs that don’t meet expectations. While launching in 439 stores may seem significant, Starbucks has over 11,000 locations in the U.S. — this was a relatively small test.

I would argue that this was not a “failure,” it was an experiment that did not produce the desired outcome. Shareholders should feel reassured that Starbucks’ management continues to innovate and experiment, but are smart and disciplined enough to not move forward if it doesn’t make sense.

Cathy Hotka
BrainTrust

It seemed like a great idea at the time! But over time it became obvious that the understated vibe at Starbucks wasn’t conducive to alcohol consumption. They should be congratulated both for trying new things and for pulling back when those things don’t work.

Gene Detroyer
BrainTrust

I tried to find my comments from the discussion of the initial announcement. I imagine they were something like, people will go to a beer bar for beer and a wine bar for wine. Drinking alcohol has a different ambiance than drinking coffee.

That being said, BRAVO to Starbucks for trying. Keep trying fresh and novel ideas. As people change, the companies that serve them must change.

Jeff Sward
Guest

“Pressure testing” is fundamental to staying ahead of the curve. It’s pushing the evolutionary process rather than just sitting back and reacting to the market. Test and take it to the next level. And if the next level is the door marked “exit” then so be it. Next case. The test was big enough for the results to be completely believable. Sounds like a good example of “fail fast.” Smart.

Joan Treistman
BrainTrust

As others did, I agree that Starbucks actually took a prudent (and financially responsible) approach by giving the beer/wine concept a good chance to succeed. But it didn’t and Starbucks shut it down. If you don’t try out ideas that you think are viable, you just don’t know if they truly are.

I think evening-hours business has to be considered within the framework of store locations. Undoubtedly there’s a difference in who shows up after dark between campus and near-campus locations and the Starbucks off the highway in a rural area. Can Starbucks ever bring both up to the same level of evening business? I don’t think so.

Perhaps the demographics and life stage of the population around those locations with less evening business yield an answer to why. From there, new hypotheses about what can draw customers in begin to develop. Is it a place for quiet groups to be invited like the knitting club, a sketching class, etc.? Anyway, it’s a “think local” approach that I believe has the potential for building evening-hours business.

Ed Rosenbaum
BrainTrust

Good move by Starbucks to make the investment in the concept, study the results then make the decision to drop the program. From my seat it never looked like it was going to be a good fit for the Starbucks model. I give them credit for looking for ways to draw more customers in off hours.

Shep Hyken
BrainTrust

Starbucks has come to the realization that selling wine won’t work. (That doesn’t mean it won’t work in the future.) I applaud Starbucks for their testing of the concept. And, they didn’t test just one or two stores, but several hundred. Their sample was big enough to make a very informed decision — very little room for doubt.

Business is like a card game. You have to know when to hold and know when to fold. Starbucks is a case study on how to properly test and move on when the test fails. Stakeholders should be impressed with how Starbucks went about it.

John Karolefski
BrainTrust

I can’t blame Starbucks for trying to extend its business into alcohol, and I am not surprised that it didn’t succeed. People don’t go to Starbucks for beer and wine. As a “brand” extension, it was doomed to fail. The Starbucks brand is too ingrained in the minds of consumers, and beer/wine doesn’t fit. On both counts, it was a bridge too far.

Anne Howe
BrainTrust

This, to me is all about understanding what the brand can and cannot do. And this lives in the minds of the users, and to some extent the non-users. SBUX is smart to keep the business models fluid, and true to the user core’s reason to be there.

In the crowded urban areas where Starbucks excels, it’s interesting to note that many urban dwellers leave their roommates behind and go to the cafes to get privacy. They define privacy as achievable in that public space because the culture is to leave people alone and let them tend to their reading, working, etc. on their device of choice. Productivity and even one-to-one socialization might be going on, but it’s less about “in real life” and more about what each individual can do.

Vahe Katros
Guest
2 months 15 days ago

I agree with what’s been said regarding the termination of sales of alcohol — regarding what they might do to increase sales in the evening, I would post a notice in the store during the evenings announcing a chain-wide hackathon to come up with ideas on how to use the space. The morning audiences have their own unique clusters (cops, nurses, early risers), but the evenings are different and I know that if I went to a coffee shop to be somewhere else in the evening, I might attend a competition to brainstorm ideas, especially if the prize was something that could help something local. I also wonder if some locations could have an area that might facilitate video conferencing — imagine an evening event where folks with similar extremely finite interests could get together with others across the country/world. I haven’t had my coffee yet, so I don’t know.

wpDiscuz
Braintrust
"From personal observation and experience, most people visiting Starbucks at night are there to study or to do work, not to socialize."

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