Starbucks Works on Recession Strategy

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Starbucks Works on Recession Strategy

03/17/2009
SEATTLE -- At its annual meeting in Seattle today, Starbucks executives are expected to outline a plan to weather the recession, including making Starbucks' products seem more affordable, and reassuring investors the company is on track to cut $500 million of costs by the fall, The Wall Street Journal reported.

"The issue at hand ... is the cost of losing your core customer," Howard Schultz, the company's chief executive, said in an interview with the paper earlier this month. "It's very hard to get them back."

Analysts said Starbucks has seen the biggest drops in customers during afternoons and weekends, and Frappuccino drinks have been hit the hardest, according to the report.

In the past month, Starbucks entered the instant-coffee market with a version called Via, and also introduced pairings of breakfast sandwiches and drinks priced at $3.95, or about $1 less than when bought individually, the report stated. The company is also opening the first of a series of more sophisticated-looking stores that emphasize traditional coffee drinks.

According to The Wall Street Journal, the new store that opened in Seattle did not have prices listed alongside the beverages, except for a small selection of high-end coffees made in a Clover brewing machine. In addition, the menu board didn’t list Frappuccinos. Instead, baristas direct patrons to disposable paper menus if they want to buy one of the sweet blended drinks or learn the price of the other beverages, the report stated. A spokeswoman for Starbucks said the changes were aimed at making the store feel more like a coffeehouse, according to the Journal.