Every “unique” trend like theirs has met a competitor and things evened out.
A&W was once the drive-in gorilla franchiser.
And Dairy Queen was everywhere at one time.
McDonald’s ruled the franchise hamburger stand arena for a while, but dozens of chains followed suit many like Burger Barn had thousands of outlets before collapsing.
And now of course there’s the Burger King, Wendy’s etc. as players.
So what’s the future for the Starbucks arena?
IMHO:
Seems like all it takes is a monied player to take them on.
Pepsico-Taco Bell-KFC can sell so many food franchises, it has instant creds in any franchise enterprise.
It could start a new competing brand in severl hundred locations at once and stun the market. If it bought an existing chain, like Chock full o’Nuts or Dunkin’ Donuts, it would quell any doubts. But it could also tie to an “upscale” small coffee chain like Pete’s and make it work.
And they don’t need a new concept or “identity”. What Starbucks does isn’t novel: a few different brews, a few muffins, nice countertops, and high prices. They could be killed off with a near-identical clone chain.
I know I’m definitely in the minority, but I think Coffee houses are a fad and never bothered with them, unless they were the only place around to eat (I’d eat gas station hot dogs/drink their coffee before I’d go to a coffee house.)
That said, I don’t really see a long term future unless they can diversify into other markets. Obviously the cost of coffee is very miniscule in driving Starbucks popularity - you can get coffee at the Wal-Mart lunch counter for $0.50 - so how can they charge $2.00 and up? Location, atmosphere. This can work in the long term for exclusive places, but not for chains. When they fall, it will be hard and staggering, but anyone who comes to me for investment stratagy is out of their mind.
But they are doing it and have been around for a while. Maybe if they have wireless internet I’d go and play World of Warcraft on lunch from my laptop, but only if the bandwidth was free…
I figure they (Starbucks) are just another segment catering to Baby Boomers - as they age, they do things. In 10 years, invest in trendy funeral homes. Right now, they drink coffee, take prescription medicaiton, live in condos, play golf, try to appear affluent and healthy, and take boner pills like crazy. Follow what they do and you can’t go wrong.
RevCo -
That cracks me up. I can see you are right. “Pepsico, the force behind successful chain food franchises, is now offering francise opportunities in their newest chain - Starbonks. It’s a golf course with an on-site pharmacy, and selling off the back 9 holes for burial plots. Follow your customers to the grave!”
You’re probably right. Starbucks takes great pride in its upscale image; not just the overall vibe of their stores and the products sold there, but also location. The chain tends to avoid locations that are not “hip” or affluent. Starbucks only arrived in Toledo and Harrisburg last year. They have several stores in Santa Fe, New Mexico, but only one in Las Cruces, a larger city with a growing of college students, working professionals and affluent retirees. 35 miles south of Cruces, in El Paso, you won’t find a single corporate Starbucks serving the 680,000 residents of that metro area.
Starbucks stores can probably be profitable in places that are less hip, but the moment they start opening stores in such locations, they’ll lose their upscale cachet and exclusive image. Starbucks everywhere in Seattle … cool! Starbucks in a trendy Kansas City neighborhood … okay. Starbucks in El Paso … ecch! They’ll have jumped the shark in the minds of their core customer base.