About once a month or so, I get random emails from Quora where someone has asked me to respond to Starbucks-related questions. This one struck my eye:
How do employees feel about their customers willing to pay a substantial premium for their coffee? Now, obviously I am not a Starbucks employee, but the question struck me as an interesting one. I just now answered it. (I quickly wrote out a reply, so please forgive that there are some typos and grammar mistakes in the Quora answer. This version is the same in substance, with minor grammar and typo problems fixed.)
I think that both Starbucks partners (Starbucks calls their employees “partners”) and customers who are able to see all of the amazing thing that the brand offers, don’t see a “substantial premium,” rather, they see the ethical and responsible things that Starbucks does.
More simply said, that one cup of coffee pays for all kinds of good things. Let’s take a look:
There is health insurance for all Starbucks partners working part-time or more;
It pays for stock-options for a partners – including part-time employees;
It funds farmer support centers which help ensure that your coffee is responsibly grown and sourced; (Ideas In Action Blog)
It funds “community stores” which give up to half their profits back to their communities – and that’s a fairly new but growing segment of stores (Starbucks Community Stores)
Starbucks donates millions to help restore areas of the United States damaged by natural disaster. (Starbucks Five-Year Contribution to New Orleans Recovery Approaches $5 Million – Hurricane Katrina article).
Starbucks funds the Starbucks Foundation which makes grants to non-profits – most recently those non-profits with a focus on at-risk youth. (Starbucks Foundation)
That cup of coffee pays for a competitive 401(k) benefit for all Starbucks employees working part-time or more, which includes an employer match program.
As should be obvious, that one cup of coffee pays for all the behind the scenes that go into the stores – the administration in Seattle, research and development of new product ideas, My Starbucks Idea, and all the quality control from the coffee tree to roasting plant to your cup.
I’m in Seattle, where Starbucks is headquartered. Here, I’ve felt especially proud of the good things that Starbucks has done in its hometown. Starbucks was born in the Pike Place Market, and while I never see it advertised, I know from having been to the store at 1912 Pike Place, that at times Starbucks has offered special products where proceeds are donated back to the Pike Place Market Foundation – which helps keep the Market going for Seattleites like myself. (I’d like to see even more of those promotions!) (I made mention of one such promotion in this old blog post here – Starbucks merchandise review: May 2012)
Those are just a few examples of how Starbucks acts with a big social conscious. There are definitely more out there.
I think anyone who understands these unique things that Starbucks does would refrain from really calling it a “substantial premium” for a cup of coffee.
At least in my view, knowing all these things starts to make a cup of Starbucks coffee look like a bargain – one cup of coffee has enormous good momentum.
That is a lot of good in a cup, and I thought my readers here might be interested in this too.
27 Comments
Leave a Reply
You must be logged in to post a comment.
Socialize
Oh, Melody, this is perfect.
It astonishes me (it probably shouldn’t) how often your blog posts reflect something that is currently impacting a significant part of my life. I had this exact discussion with a friend just a couple of days ago. I’ll admit that I wasn’t nearly as eloquent as you, Melody, but it is gratifying to know that we brought up most of the same points. I’ll be sure to send this to her. Starbucks core values, involvement, and service projects make me proud to be a partner.
Thanks for sharing this with your friend. I hope the conversation goes
well. I have no doubt that Starbucks is lucky to have you.
Melody,
Speaking as a Starbucks partner, that was a very well thought out response to the question posed to you. I have a similar conversation often, be it with customers or friends and family. I couldn’t agree more that I do not see such a thing as a “substantial premium” associated with our coffee. The truth is that coffee has been undervalued for so long that the perception is that of a substantial premium when it reality we are working toward a more balanced relationship between farmers and roasters in which farmers are paid a fair price for their crop.
Good points. I think most people will pay a little more when they know what they’re paying for. And please share! 🙂
Nicely said, Melody, and I was happy to see that coffee prices are coming down and Starbucks is dropping their prices of bagged coffees in stores accordingly. I hope they drop drink prices a bit too.
As most of us know, the whole Caribou/Peets thing” has , or will I feel sure, be giving Sbux a lot more competition, especially outside Seattle. I am sure (and have bee told by various sms, dms, etc) this will be affecting Sbux, and there are likely to be more promos . I know here (Chgo area), there will be all free “dark” brew for whoever orders it this Friday, the 19th….. it’s House Blend (actuallly re-catergorized as “medium”) and will be free to all who order ‘dark’ on the 19th from opening until noon. Not well publicized, but this is what I’ve been told. So, a little competition will be good, imo. 😉
As both a former Starbucks partner, and lifelong fan, I totally concur. Starbucks does all of what you mentioned, plus so much more. To me, the coffee tastes amazing. It’s rich, full of flavor, complex, and smooth. If I drink others, it might be Peet’s. I don’t indulge in coffees that aren’t similar to the Starbucks roast.
As well, no one else has anything quite like the Starbucks reserves. If they do, they are astronomically priced.
Do I see Starbucks as a luxury?
I don’t think that a cup of drip coffee, anywhere, should be see as a luxury.
When one gets into Clover coffee, Venti Frappuccinos with every sugary ingredient in the store therein, and 10 shot espresso drinks, then, yes. This might be considered a luxury.
Unfortunately, due to the positive proliferation of folks purchasing these kinds of drinks, the press has, sometimes, made it out that Starbucks is an expensive commodity.
I think that everyone needs to try Starbucks at least once. I don’t care if you go in for a short drip, or a trenta Refresher.
I am grateful that Starbucks takes the care, and attention to detail in everything that they do.
To all of these ends, plus more, my company – Pazzaria Productions – proudly supports Ethos Water, STARBUCKS (RED), and Create Jobs for USA.
For $2.00, you can help a child who doesn’t have clean water, get clean water. – Ethos Water.
When purchasing a STARBUCKS (RED) product, you can help end AIDS in Africa.
For $5.00, you can help America get back to work.
It’s here – http://www.pazzaria.com/Pazzaria_Productions/Responsibility.html#.UWpgQ7-bJOE
I don’t know of any other company that has so many programs that are both internal, and external.
Go Starbucks!
Melody, thanks for perspective. However, none of your points has ever crossed my mind. I am a coffee drinker and I like Starbucks coffee. I like the atmosphere of their stores and coffee gear. I pay the price for my Starbucks because it is a good product and I like it. I pay more because it tastes better, plain and simple. From a dedicated Starbucks whole bean coffee customer.
I have to say, I agree with Jeff Bass. the coffee. While I think all those good things they do are mostly wonderful, what brought me in and kept me, with Sbux for so many yrs, is the coffee. If they changed that (which, to some degree, they have…ie: PPR all day, having to often get a ‘pour over’ instead of the BOLD roast that I love and brought me there, and wait a few minutes…. sometimes a problem but mostly not (the wait), the new (promised by H.S. to “never” happen) BLONDE, so many VIAs…a few would do, I think, and bla bla bla….so, they have actually changed some of what brought me (and kept me) there but still, it’s the coffee. and, I think for the majority of the coffee drinkers who walk in and buy a cup of coffee…it IS the coffee. In fact, I see so many people ordering who know very little about the drink-possibilities, let alone what the company is all about…or, all the ethical stuff you posted Melody. So, for me, it’s the coffee. If I couldn’t still get BOLD all-day, one way or other, I wouldn’t be going to Sbux.
How about it Denise? It’s always been about the coffee for me without thinking about all the other stuff. I do think Melody does however hit a nerve that most people rarely think about or care about where that extra money goes.. I am however happy to pay a little more for the sake of the partners benefits. This is why I can’t figure out msi anymore. Too many people want Starbucks to be the Sears of yesteryear where you can buy just about anything. Sooner or later, every company tries to rediscover their roots! To me, that day can’t come soon enough with Starbucks. But will they.
OT: Hey Denise! You weren’t in River Forest yesterday (4/13/11) afternoon in the Whole Foods next to Starbucks – were you? I have an idea what you look like from your FB pic. I also recall seeing you friended to the FB Austin Neighborhood page about 6 months ago.
I’m 2 years too early!
4/13/13
@Denise – No I’m not. I’m not a FB person. The Island Neighborhood I grew up in has their own FB page. I do use an alias FB Acct. just to heckle some friends from time to time, but that’s about it. I was born and growing up in Austin when most people on that Austin FB page were in HS. I’m a bit younger. I moved from Lafollete Pk. to Austin and Roosevelt in 73. Things were changing as you know. I do believe the Austin page has some interesting history on it from time to time that I can relate too. I have a lot of memories as a kid at the Library and Columbus Pk.
@chgo: no, wasn’t me on 4/13 in the RF Sbux and/or Whole Foods…altho it could’ve been! Are you on the Austin Neighborhood page???? sorry so O.T. Melo
dy 🙁
Melody you gave out some info I did not know about for instance the community stores. I am not familiar with Quora so if you could briefly explain how your blog is connected with this I would appreciate it.
Hello Purple1! My blog is NOT connected with Quora. I wish. Quora is a form of social media. Foursquare, PInterest, Twitter, Facebook, Quora … all are forms of social media. Quora is significant in size, though I do find it interesting that according to Alexa, most of their visitors are from outside of the US.
The idea behind Quora is a question and answer format. You sign up. You create a profie. You can read random questions, and answer random questions. I tend to follow the Starbucks category of questions.
You know how on Twitter, it will suggest profiles for you? Well, on Quora, I think there is some feature that will suggest to you someone you should ask to answer your question. You write a question on Quora AND send an email to a Quora member, via his or her profile.
Over time, I think what has happened, is that some how Quora has started referring people to me to ask Starbucks questions. It’s actually quite flattering, because it would suggest that somehow Quora thinks I’m knowledgeable on the topic of Starbucks.
By the way, if you install the Alexa toolbar, you can see a rank from one to 30 million. This is the relative popularity (in terms of traffic) of a website. #30 million would be the least popular website out there! Being ranked anywhere under 400,000 or 300,000 is actually pretty darn good. There is no doubt that there are some problems with the way Alexa works, but when you find a new website, it will at least give you some idea of how popular that website is – And Quora has a world-wide rank of below 1,000 which is very good. It wouldn’t surprise me if Quora receives millions of visitors every single day.
Denise I understand what you are saying and it does seem on some levels SB has expanded beyond its original intention. I do, however, like the idea that they are community minded but that being said I do see differences from one region to another as to how far a district or store will support their community. BTW we have no Peets around here. Have you heard that they are expanding because I do not know of this.
@Purple1 – Caribou is done! Peets will assume half of their stores and change the name. The other half will be history. I’m a little confused by which States the Peets name will take over and which States they will abandon the remaining Caribou stores. I know their intent is to take over the Caribou locations within a certain area, and ignore all the other areas outside the targeted area. This was announced at the end of last week going into the weekend. It’s unclear to me whether the Caribou stores in the Chicago area will open as Peets.
@Chgo and @purple1: when this was 1st announced (Caribou bought out by Peets), I can go back and look but I think I remember reading that Illinois will be one of the places where some of the Caribou’s become Peets. I’m really hoping that this will be around here! There’s a Caribou just 1 block away from the 1st Mt. P. store…am very much hoping it becomes Peets. It’s a very nice (at present) atmosphere…fireplace, etc and I’d like to see Sbux have a bit more competition in larger metropolitan areas. I’ll ask in that Carib. today…..see what they know.
@Denise – I was wondering if the Caribou in Oak Park across from the River Forest store was going to become a Peets. I went to Caribou when it first opened, but haven’t in some time. I like their coffee. I wouldn’t mind trying Peets.
@chgo: I, too, went to that Caribou in Oak Pk when they 1st opened…..no Sbux at that corner then so often I just ran in to Caribou…. wasn’t it (Caribou) gone for a while? from that spot? cannot remember. I have tried Peet’s…there will be some competition there…..(pretty good).
@denise (t)???? – LOL!!!! That is an interesting question about that Caribou store. I’m not 100% sure, but I think they were closed for a short period of time during the first year or two of locating themselves there. I don’t know why they did, but come to think of it, I do vaguely remember it now that you reminded me. If you remember….. On the SW Corner of Lake / Harlem, before Pompei Pizza and Noodles Company, their was a nice size Cafe at that location that closed. I don’t remember the name or if it was a chain. That is the only thing that disappeared.
I keep having issues with the Clover Store at Harlem / Lake. IDK what their problem is! They have really nice partners, but they mess up every Clover drink, especially iced coffee. They just keep forgetting to add things. It’s like they don’t bother reading what’s marked on the cup.
Ah! Melody, this is so spot on.
Back when I was a barista, one time someone said “4 dollar frappuccino? How do you sleep at night?”
My quip was perfect: “With health insurance.”
Beyond what Starbucks does for partners, they do a lot for their farmers too. They also work hard to ethically source their coffees. Here’s an example of a farm audit they do as part of their CAFE practices certification: http://www.scsglobalservices.com/files/CAFE_SCR_Genericv3.0_101812.pdf
Once a farm passes Sbux signs a contract to buy exclusively from them for double the price they would get in the normal commodities market. I also have found Starbucks to be less expensive than all of the independent coffee houses in my area.
It would be nice to have a chance to sample Caribou, but I guess that will not be an option. I think I have been to a Peets in CA.
I know that feeling. There were no Caribou coffees in Washington State at all, as far as I know. I tried Caribou coffee once at the Denver Airport. I’m a little more familiar with Peet’s – There are a few in Seattle for sure.
@purple1: you’re really not missing much in not being able to try Caribou, imo. It would be an ok last choice (if no Sbux) but otherwise, everything I had at Caribou tasted kind of like a weakened version of Sbux. (or, maybe like PPR, or even Blonde). That’s a vague memory because I haven’t had any thing of Caribou’s for yrs. Like Chgo., I used to go to one (Caribou) before there was a Sbux in a location (Oak Park) that we (Chgo and I) are both familar with.
and @ Chgo: yes, that Caribou was gone, closed for a couple yrs. I always thought that was due to Sbux, then they re-appeared. weird. And, I do remember that cafe on the corner, where Sbux is now…and yrs ago when Wieboldts (sp?) was on that corner…they had the best Christmas windows……but that was yrs ago….