Starbucks Primo

8/21/2019 Starbucks Primo

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StarbucksDesign Brief

November 4, 2010

Benjamin Gadbaw

Christopher Cannon

Cooper Smith

Tina Ye


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Starbucks represents somethingbeyond a cup of coffee.

HOWARD SCHULTZ


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In 2009, Americans drank 146 billion cupsof coffee


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In 2009, Americans drank 146 billion cups of coffee(Thats $40 billion in sales)


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=1 BILLION CUPS OF COFFEE


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Home Coffee Sales:

$6.3 billion

($915 million in specialty coffee sales)


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VIA US Instant Coffee:

5% market share

($100M first ten months. Estimated $1B by 2015)


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Competitor Revenues(in billions)

Starbucks

McDonalds

Dunkin Donuts

2005 2006 2007 2008 2009

0

5

10

15

20

25


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McDonalds Latte:

(40 less than Starbucks)


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$6.9 billion yearly sales:

(servs 30 cups of coffee every second)


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Starbucks Response:

30,000 economy coffee outlets

(supermarkets, Burger King, Subway, AMC theater)


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The Third Wave:

+70% specialty coffee houses in 5 years

(thats one coffee house for every 14,000 Americans)


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The battle within the

company is making sure growthdoesnt dilute our culture.

HOWARD SCHULTZ


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Market Saturation:

900 Starbucks store closures in 2009

(within the United States alone)


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Strengths Starbucks is the market leader in the coffee industry Product diversification

It has 16,635 stores in 40 countries worldwide including

11,068 stores in the United States Company operated retail stores, (licensees, no franchises)

Customer service is excellent

Customers are satisfied with the quality and taste of coffee

High brand awareness and equity

Approx 13,000 valued and motivated employees,good work environment

Financial conditions of the company are good

Starbucks coffee shops locations are at convenient places

like library, shopping malls and etc.

Starbucks making their business more environmental friendly Customer base loyalty

Good relationships with suppliers

Product is the last socially accepted addiction


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Starbucks seeks to be an authentic coffee

experience that conveyed the artistry of espressomaking, a place to think and imagine, a spot

where people could gather and talk over a great

cup of coffee, a comforting refuge that provided

a sense of community, a third place for people

to congregate beyond work or the home, a place

that welcomed people and rewarded them for

coming, and a layout that could accommodateboth fast service and quiet moments.

HOWARD SCHULTZ


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Starbucks Primo


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Kent, WA

Portland, OR

Minden, NV

Columbia, SC

York, PA

Starbucks Roasting Plants


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Store Conversion Budget

Conversion to a Starbucks Primo will share many similarities with opening up a

new store. The biggest expenses will be:

Retraining or rehiring staff

Redesign & remodeling of store

Acquisition of furnishings and decor

Acquisition of supplies & stock

(complementary food items, coffee, liquors)Administrative and infrastructure changes


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New store in 1995: $350,000

x 44% inflation rate

New store in 2010: $504,000


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Cost of implementing a Starbucks Primo:$400,000


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Implementation time per store: 3 monthsForegone revenue: $250,000


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Total cost of implementation per store is$650,000


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1,000-1,500 square feet


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1,000-1,500 square feet4570 seats


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x 5 hours


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x 5 hours

= 225350 people a night


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x 5 hours

= 225350 people a nightx $15/person


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What does $15 look like?

5-cup Coffee-Tasting Flight: $18

... paired with dessert offerings: $25

A single specialty coffee drink paired with a

single dessert offering: $11$20

A couple alcoholic coffee drinks: $12$18


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x 5 hours

= 225350 people a nightx $15/person

= $3,375-$5,250 per day

x 365 days= $1.3 million$2 million a year


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Projected Revenues(per store)

Average Store Revenue (2009) Projected one-year revenue

$930,000

$2M

$1.3M (1,000 Sq. Ft. Stores)

(1,500 Sq. Ft. Stores)


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Starbucks Primo. . . . . . . . .

Starbucks. . . . . . . . .

Seattles Best. . . . . . . . .

Via


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(Starbucks) Circadia


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HIGH ENDi i i


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CHAININDEPENDANT

LOW-END

HIGH-END

Starbucks

Seattles Best

NespressoStumptown

15th Ave

Local Cafs

Peets Coffee

Dunkin DonutsNeighborhood

Corner Stores McDonalds

Positioning

HIGH ENDP iti i


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CHAININDEPENDANT

LOW-END

HIGH-END

Starbucks

Starbucks

Starbucks Primo

Seattles Best

Nespresso

Stumptown

15th Ave

Local Cafs

Peets Coffee

Dunkin DonutsNeighborhood

Corner Stores McDonalds

Positioning


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MondayFriday

Weekend

WAKE

WAKE

GET TO WORK LUNCH

LUNCH

SLEEP

SLEEP


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Long Term Benefits

Increased visibility

Increased respect among the coffee-drinking elite

Strengthened brand equity


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Starbucks Primo

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