Starbucks And The Future Of “Third Place”

The concept of a “Third Place” (somewhere that is not your office or home to get work done) has really shifted since the pandemic.
The most notable Third Place was Starbucks.
A place where people went to be seen… or seen working.
A place where a six dollar cup of coffee became both fashionable and a public statement of luxury.
A little (but an expensive) indulgence.

Starbucks cafes sprouted on every corner.

The dream of Howard Schultz to transform the Starbucks brand by mimicking the famed coffee and cafe culture of France and Italy for a North American customer worked.
But now, Starbucks looks, feels and tastes a little differently from the glory days of Schultz.
Founded in 1971 and currently the world’s largest coffeehouse chain, over 70% of Starbucks orders are done through their famed mobile app or drive-thru.
You can even see the cultural and economic shift in your local Starbucks.
Fewer cozy chairs and a more transactional atmosphere… is this a place of connection, community and relationship building?

As Starbucks grew, it began facing competition from both fast food chains and local/third wave cafes.

Starbucks recently named Brian Niccol from Chipotle as their new CEO.
Prior to Niccol, Laxman Narasimhan held this role and said this last year:
“Third place is a broader definition. Classic definition of third place — it’s a box where I go to meet someone — it’s frankly not relevant anymore in this context.”
Let’s see if Niccol’s agrees or continues down a different path.

So, what exactly is the Starbucks brand today?

This will the company’s biggest challenge.
Is it the growth and acceptance of digital?
Is it the changing consumer’s tastes?
We have seen the shift from a business serving hot coffee to one in which cold coffees, teas and lemonades make up more than half of sales.
Perhaps this headline from The Daily Mail says it all: Starbucks offers 300 BILLION possible drinks combinations, experts say, as they reveal the annoying issue that’s hurting the ailing coffee giant.
Now it’s a transaction business and not an engagement one.
Now, it’s serving drinks… a lot of them… and very different ones to each consumer.

And what happens when a brand shifts from status to commodity?

This is what Robyn Flynn and I discussed on CJAD 800 AM. Listen in right here.

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