While it is sexy to brand this (especially for media) as a 'threat' or 'will take on' Starbucks, that should not be the focus and it should instead be about delivering maximum value to its customers, which are likely going to be different customers than Starbucks customers. Starbucks customers go there for the customer experience, not for the coffee - there is better and cheaper coffee elsewhere, even McDonalds (literally).
I hope they are laser focused on their demographic and who their customer is rather than try to be the universal solution to coffee. A challenge will be how do you deliver the same exciting experience on a coffee stand without having the focus becoming operations and churning out coffee as quickly as possible. Most people can probably grab coffee at work for free if they wanted to but they choose to go to coffee shops for the "cool factor", and to feel like they are taking a break from their normal routine. If the person(s) running the stand need to be super friendly, engaging, fun, etc. if this is going to really take off, and experience shows us that is no leap of faith as you operationalize and expand locations so quickly.
Rent and costs has spiralled in the big cities, meaning that a customer that sits half a day with a laptop costs Starbucks money. Starbucks profit is in Take Away.
Every customer at Wheelys is a take away customer.
The customer who sits half a day in a Starbucks is doing free advertising for Starbucks. A filled and busy shop attracts much more business than an empty one.
I've had chats with the manager of one of my favourite locations. It gets pretty slow mid-afternoon, and she made it really clear that she's super happy having some people sitting in there working, even if they're sipping the dregs from a 2-hour-old free-refill coffee. The regulars usually have chatted at least a little bit (maybe that's a Canadian thing), and having conversations or work going on improves the atmosphere.
The trick with restaurants is to sit customers near the window so it looks like they are more busy than they are. Ever wondered why in a huge mostly empty restaurant you're placed next to existing customers.
> "... meaning that a customer that sits half a day with a laptop costs Starbucks money."
If you consider that the largest cost is probably rent, then people sitting around probably add only a tiny amount more. It's only an issue if the shop happens to be be full and there are other customers who wanted a seat.
That person sitting there is probably doing Starbucks a favour. People are more inclined to go somewhere where there are other people.
This is not quite accurate as it assumes that Starbucks must have premises of a certain size. If Starbucks had smaller shops they'd pay smaller rent. Their business model of having large shops is their problem right now.
I don't think it's a problem, but it is a limitation. Starbucks can't place a location anywhere they can't fit one of their buildings.
As comments further down noted, there are two types of coffee customers: (1) get it and leave & (2) spend time in a coffee shop.
Where (1) breaks down is basically if you don't have access to a Starbucks on a commute. Which to me is a particular type of customer: lives in a city core, bikes or walks to work / uses mass transit. These are the type of customers Starbucks can't really afford to chase. They're designed as a stop when someone is commuting in from the suburbs via car.
Deliver a high-quality, dependable (key!!), possibly cheaper product right in front of a rail or transit stop? Bob's your uncle.
Good luck!
PS: Step 2: ? Step 3: (Get bought by Starbucks and profit!)
> a customer that sits half a day with a laptop costs Starbucks money.
First, congratulations on your launch! I hope to try Wheelys out soon!
A bit of well-intentioned feedback regarding your positioning strategy: as I am often the customer you mention who sits at Starbucks (or other coffee shops) all day, I can assure you that the owners don't perceive me as a cost even though I don't buy much (I often speak with them and ask about life as a small business owner). In fact, at locations I often visit, it's very common (say 1 in 3 visits) for the managers to give me a tiny freebie. Maybe I'm just a likable guy, but I don't think I'm so charismatic as to completely warp their perception of me being a drain or a benefit.
I think one important point is that I make sure to buy something any time I'm taking up space and the place is crowded (say 70+% fill rate on seating space). But that's at most 2 hours per day (the morning pre-work rush and the lunch rush). In those peak hours I would agree that I am taking up valuable real estate and should contribute something to their upkeep.
Anyway, congratulations again and I hope to see one of your sites soon!
Sure, I elided a bit of complexity. I visit many coffee shops, including Starbucks. Some are owner-operated, some are not. Indeed Starbucks doesn't have a franchise model. And yet the managers both there and at owner-operated shops always seem happy to have me around "taking up space", and often offer me a free something-or-other.
That doesn't change the fact, raised in a sibling comment, that given the fixed cost of rent, having someone in the shop during off-peak hours is in a sense "advertising" the desirability of the place. Trickle revenue + "advertising" using up slack capacity seems like a clear win for them, given the pre-existing real estate investment.
Restaurants (and probably coffee shops) seem to have an easier time attracting customers when there's someone already in there. So, at high utilization you'd be a cost, but at low utilization every bum in a seat is an advertisement.
Interesting. Then how come there are so many non-corporate Starbucks outlets? The ones that don't get the same new products and don't take their gift cards -- like airports, for example.
I believe it's a licensing arrangement. Those locations often buy and license Starbucks coffee (though often not their baked goods), but are not run by Starbucks. e.g., Barnes and Nobel, Safeway.
Just to confirm, that's exactly what it is. From what I can tell around here, it's mostly for places that already have a larger unionized food service organization. Two examples that come to mind are the local university and a local hospital. These "Starbucks" use all of the branding and coffee, but are staffed by the organization that hosts the store.
Agreeing with you, I'm pretty sure there's no way for an individual to open their own Starbucks store; the licensed stores pretty much have to exist within a larger organization where it would be impossible to open a store independently (in the local cases, that'd be due to the food service unions).
In Canada at least, there's also instances where Starbucks has worked out some kind of cross-renting deal. Chapters/Indigo Books is a prime example. Every Indigo I've gone into has had a Starbucks, but those are staffed by Starbucks employees and not Indigo employees.
All Starbucks out of a few markets are operated by Starbucks. And even the ones that aren't operated by Starbucks are operated by Sodexo, Marriott, or some other big company.
That customer is likely to purchase coffee or something at Starbucks. Half a day is quite some time to go without having something to drink or having a bite to eat.
Presumably Starbucks has calculated this. There's new one near me on 53 and 3rd that has plenty of sitting space, and the food is arranged differently (more like Pret I guess). And there's a sign posted outside that anyone can come and sit without having to make a purchase.
The coffee shop is, for many people - especially those starting a company or working on their own - their office.
If Starbucks is smart they will let people sit there all day!
The only reason I drink Starbuck's overpriced bitter coffee is because they have been kind to Anyone who walks through their door.
They have allowed anyone(including the homeles) to use their restrooms. Although I think that's starting to change? Watch it Starbucks--some of us notice those Managers who take their job too seriously, like its their bathroom.
I go to Starbucks because of the welcoming environment--period. I don't like anything they serve. I could go to the coffee shop across the street(the Coffee Something), but I remember the time they asked my friend to leave. (He looked homeless, but was worth a few million dollars.)
I will never forget that day, "You get outa here, you don't spend money!" He was actually one of their better customers, but this particular day, the owner was filling in for a employee. He never went back. My friend easily spent $4/ day, and he was there 4-5 days a week. RIP--RBB.
I like Starbucks even if it is overpriced in my opinion. I think the coffee is good. But mainly, you are right, I am willing to pay more for the welcoming atmosphere and ability to sit and get work done without being bothered. With that said, I was in Boulder last winter and was running early for a meeting. I swung in the Starbucks downtown to stay warm and do a little work. I didn't purchase anything, but had to use the restroom. To my surprise the restroom had a keypad on the door. When I asked the cashier for the code she said I had to purchase something. I was rather shocked, although at that point they pretty much had me on buying something :) Ended up using one of my rewards, calling corporate to complain, and having my reward refunded back to me. A lot of work to go through just to use a bathroom. On the flip side, I live in a resort town where the population swells by the hundreds of thousands over the summer. The Starbucks here could care less if you are a customer or not.
... I don't think this is the success story you want to paint it as. Who cares if he's a millionaire if he's only purchasing $4/day? If a retail shop is reliant on a customer worth a mere $4/day, then it has serious problems.
And if his presence discourages other patrons or consumes space that other paying patrons could have occupied, it's a drag on business. Sure, having an empty shop is a problem because it makes you look unpopular, but conversely, having a full shop of people who aren't purchasing anything is equally bad, because it blocks people who do want to purchase.
I would think SB understands how to maximize revenue based on size, rent, and location of their stores. Revenue/sq ft would be one metric to use. There's SBs out there with no seating or public seating (like airports), to ones in stripmalls you have to drive to.
This would also need a licence to operate in many European cities, you can't just start selling coffee on the street. I guess the licence will be much cheaper than rent, but it's a cost,and it might not be even granted in the first place.
There are some interesting psychological reasons why people hang out in cafes. Procrastination is one of them. When you're at a cafe and you have your laptop out, there's a similar social pressure that exists in the workplace or university classroom that sort of discourages procrastination (eg watching YouTube videos) and encourages being productive. I remember reading about this in NPR or Psychology Today, but can't track the article down now.
yes, this headline is a perfect example of Maciej's recent complaint: "The other part of our exponential hangover is how we build our businesses. The cult of growth denies the idea that you can build anything useful or helpful unless you're prepared to bring it to so-called "Internet scale". There's no point in opening a lemonade stand unless you're prepared to take on PepsiCo."
Why not back this company to, you know, sell good coffee and be a success on its own terms?
Starbucks customers go there for the customer experience, not for the coffee
Actually we go for the coffee. But there is something to be said for the store experience of Starbucks, it is high-class and delightful, compared to something like Dunkin Donuts.
there is better and cheaper coffee elsewhere, even McDonalds
People who can't taste the difference between McDonalds' coffee and Starbucks, are not in Starbucks demographic. For the price, you can't get a better cup of coffee, unless you're willing to roast the beans yourself.
With that said, the key issues with Starbucks, are long lines, high prices and the wi-fi squatters. I seriously doubt that a cart based coffee stand can address all of these issues.
As a curiosity, have you tried the new McDonald's coffee? I'd call myself a low-mid coffee snob, and I'm pretty impressed with it, for what it is.
I, however, do go to Starbucks to be one of your problems: I'm a wi-fi squatter. I'll go in, get an Americano and sometimes a breakfast sandwich, and sit and work until lunch time. If it gets busy and there's no tables available, I'll leave early.
I get the impression that the organization doesn't see us as a problem though. The Starbucks closest to my house wired in extra outlets so that there's a row of tables with 2 outlets per table. I'm on a first-name basis with all of the staff, and we have deeper conversations beyond "how's your day? good. good."
There is lots of better coffee nearby in my town, but I go there pretty much 100% for the welcoming atmosphere. There's a place that's across the street from a Starbucks with little signs on the tables that say "If you're staying for longer than 45 minutes, please make another purchase." I don't go there very often; we obviously don't have compatible desires from the exchange.
McDonald's regular brewed coffee has always been quite good (same with Dunkin' Donuts), and they brew it fresh constantly.
The 'McCafe' or whatever they call it espresso-style drinks are pretty poor.
However, most McDonald's offer free wi-fi that's usually faster than Starbucks, usually don't have many people in them, and don't mind you sitting around for a couple hours working on stuff. Bonus, they have a better menu of stuff to snack on than Starbucks.
most don't "brew it fresh constantly". they keep the pot on the burner until it is empty (or in newer hardware, store it in an urn that limits air exposure somewhat) until they need more. None I've seen actually time a brew set and throw it out when it hits that shelf-life counter, like Starbucks (let alone do individual pourover brewing like better coffee shops).
McDonald's requires their franchises to brew a fresh pot every 30 minutes (I'm not saying all do, but I've seen it happen often enough I'm pretty sure most stores follow the rule, McDonald's brand is built on consistency across stores).
They also source their beans from Gaviña, a well considered supplier, who I believe does the roasting as well.
I love coffee, particularly darker roasts. I tend to drink my coffee black, I usually buy better-quality coffee (pretty much all big-brand store-bought coffee, e.g. Folger's, is bland and weak).
That said, I hate Starbucks coffee. I'm sure their fancy, sugary drinks are better (and the reason people prefer them to another coffee place) but as far as just black coffee goes, Starbucks is terrible.
Dunkin Donuts is better (particularly the dark roast) and I also enjoy the new McDonald's coffee (although it seems to depend on location, some McDonald's seem to be better than others).
I go to Starbucks pretty often, but specifically for their espresso drinks (latte, macchiato, iced drinks, etc). None of which you can get at McDonalds, or at a cart like this. Most of the people I see in Starbucks are not drinking "coffee", they are drinking some fancy thing with syrups and ice and espresso.
I go to Starbucks for the coffee. And I don't generally stick around unless I have time to kill for some reason. And I'd get coffee from one of these if the line was shorter and the price was close to the same. Admittedly I'm not super particular about my coffee, but I drink a few cups a day.
>> Starbucks customers go there for the customer experience, not for the coffee - there is better and cheaper coffee elsewhere, even McDonalds (literally).
This is a sweeping generalization. Coffee, like food, is a vastly subjective experience.
>> Most people can probably grab coffee at work for free if they wanted to but they choose to go to coffee shops for the "cool factor", and to feel like they are taking a break from their normal routine.
Who are these 'most people' are why are we making assumptions about where the get their coffee from without a research or a survey citation?
I'm sorry, I don't intend to be mean spirited here, just that I've been increasingly seeing seeing comments here that appear well thought out and well written on the surface but are peppered with logical and factual fallacies.
Oh, lighten up, this is a discussion forum not a thesis paper. It should be obvious that comments like this are anecdotal opinions without the constant need for phrases like "in my experience/opinion".
McDonalds, seriously? It tastes like pre-Pike Place roast Starbucks (circa 2006), whereas current Starbucks Veranda blend pourover is actually pretty good.
I hope they are laser focused on their demographic and who their customer is rather than try to be the universal solution to coffee. A challenge will be how do you deliver the same exciting experience on a coffee stand without having the focus becoming operations and churning out coffee as quickly as possible. Most people can probably grab coffee at work for free if they wanted to but they choose to go to coffee shops for the "cool factor", and to feel like they are taking a break from their normal routine. If the person(s) running the stand need to be super friendly, engaging, fun, etc. if this is going to really take off, and experience shows us that is no leap of faith as you operationalize and expand locations so quickly.