Starbucks Still Trying to Get Food Right

Oct 14, 2002

By George Anderson

Starbucks has revolutionized the coffee business. What it has failed to do, says the Puget Sound Business Journal of Seattle, is figure out how to match the success of its food to its beverage offerings.

The chain has tested a number of food offerings beyond its basic muffins and scones with little success. The most recent experiment, however, may signal that Starbucks is getting its bearings.

Starbucks has been running a 20-store test in the Seattle area of a new breakfast sandwich line known as Savory. Originally scheduled to end last month, Starbucks has extended through October.

The Savory line consists of four breakfast sandwiches containing eggs, cheeses and meats served in focaccia bread. The sandwiches are displayed in a refrigerator case. Starbucks’ shoppers bring them to the counter, pay and wait for the sandwiches to be warmed in a convection/microwave oven. The sandwiches in the lineup retail for $2.95.

Expanding into food service poses a number of challenges for Starbucks, including supply chain issues, customer service, product quality and safety. The potential payoff could be significant, however. Husein Kitabwalla, senior director of retail brand operations, Sodexho, told the Puget Sound Business Journal, “You can increase your check average from coffee, to coffee and a muffin or sandwich, and have them spending $5 to $6 instead of $2.99.”

Moderator’s Comment: What do you see as the opportunities
and risks of Starbucks venturing further into food offerings? Is it good business

If Starbucks gets it right, same-store sales would improve.
How many Savory sandwiches, can the chain expect to sell? One store mentioned
in the Puget Sound Business Journal piece is said to be selling 20 sandwiches
a day (eight more than its goal). If this were typical of the performance that
could be expected, what does Starbucks need to keep its costs to, to make this
profitable enough to pursue. If it were to gross a dollar per sandwich, that
would drop more than $32 million to the Starbucks plus column. [George
Anderson – Moderator

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