There's a saying that all business is the same -- you find a way to make something cheaply and sell it for as much as you can possibly wring out of your customers. It doesn't matter whether it's burritos or coffee.
Lending credence to this tired old aphorism today is Starbucks, which ousted CEO Laxman Narasimhan, who been on the job only 16 months. Taking over his chair will be Brian Niccol, currently the CEO of Chipotle Mexican Grill.
Why did this happen? Were coffee drinkers demanding a change? No. Like most corporate upheavals, this one came about because of restless investors, who have been unhappy with the profit picture.
That may be hard to believe for a company that charges $4.15 and up for a large -- oh sorry, venti -- cup of coffee but if someone will pay $4 for a coffee that used to cost a quarter, maybe they'll pay $5?
Restless customers
Not everyone will do that, of course. "Very disappointed with Starbucks, will never go to Centennial on the Mountain again. Paid over $2 more there then any other store," said Jim of Binbrook, Ontario, in a ConsumerAfffairs review a few days ago. "Very poor way to run a business! No customer satisfaction at all."
While Jim may not realize it, his complaint is probably not causing too much concern at Starbucks HQ. China is actually the sore spot for Starbucks these days. Business is off there, as it is for quite a few other Western products which find themselves facing tough competition from local brands.
Narasimhan had also managed to get on the wrong side of Howard Schultz, Starbucks' founder and chairman.
“The stores require a maniacal focus on the customer experience, through the eyes of a merchant. The answer does not lie in data, but in the stores,” wrote Schultz on a LinkedIn post after poor earnings results were released earlier this year.
Schultz says he's happy with Niccol. “He has my respect and full support,” he was quoted as saying.
Both companies have reinvented some pretty basic product lines. Coffee is rather simple but can be customized and generally spiffed up to be pretty pricey. Same thing with burritos and other Mexican dishes, which -- you must admit -- may be cheap to make but are about as delicious as anything you're likely to find elsewhere, to the distress of the hamburger industry.
But that's another story.