Coffee hipsters have been worshipping at the altar of the $11,000 Clover coffee machine for quite a while now. So when Howard D. Schultz, chief executive of Starbucks, announced at last week's annual shareholders meeting that the company had acquired the Clover Equipment Company, these coffee hipsters were understandably surprised.
Even non-hipsters were surprised.
Mr. Schultz described the acquisition as part of the company's effort to "make better coffee".
It's a mistake.
The "overwhelming majority" of Starbucks customers buy what the New York Times described as "drinks that sound like punch lines: a tall honey latte with whipped cream, a venti caramel macchiato". These are high-margin, high-velocity products that can be made quickly and whose dominant flavor is sweet. Devotees of these products don't want better coffee, they just want whatever peculiar coffee-flavored confection they're addicted to. It doesn't take a highly-skilled person to make one, just a consistent one.
And remember that a cup of coffee prepared by a Clover machine is the product of a slow process, and the final flavor depends on the quality of the bean and even more strongly on the quality of the roast, flavors that will vanish when subjected to the sort of sugar- and cream-abuse most customers exercise on their coffee.
Mr. Schultz said the Clovers, when they appear in stores, will be the centerpieces of what he called a shrine.
OK, I have a few questions:
- Where are the "I drink my coffee black" supplicants who will worship at these shrines?
- What will be displaced by these shrines? I don't know if you've looked, but most Starbucks stores aren't actually swimming in excess space.
- Who will staff these machines?
- What is the impact on throughput while the on-staff barista works the Clover from start to finish? Put another way, how many cups of drip coffee or traditional espresso-based drinks could a store turn over in the time it will take to make one cup of Clover coffee?
- How much more will they charge for the privilege of enjoying a single cup of Clover coffee above the already high cost of regular Starbucks drip coffee?
- How many other related products will Starbucks have to sell you along with your Clover coffee to make up for the cost associated with operating it?
- Will the presence of a Clover bring new customers in and keep them coming back?
- Will the inevitable slow-downs caused by the presence of a Clover drive customers away? In case you didn't watch the video above, the cycle time to create a single cup of Clover coffee is around 90 seconds, which doesn't include the time to portion the beans and grind them.
- Was the buy simply an effort to bring some of the cachet of a clearly prestigious brand to a brand that is struggling to raise same-store sales in the face of an economic downturn?
- Will Clover enthusiasts trust Starbucks to carry the sort of correctly-roasted beans required to make each cup of Clover coffee "all it can be" and not just a high-priced cup of drip coffee you have to wait for?
Evidence that Starbucks isn't sure of the answers to these questions can be seen in their roll out - they are putting only six machines in the field, three machines in Seattle and three in Boston. And these are two coffee-mad cities already full of coffee-hipster shops that survive because they've created a loyal customer base that won't abandon ship overnight. I seriously doubt they will find the same sense of community and artisanal focus at Starbucks where they have to wait for the barista to finish crafting a "venti caramel macchiato" before he fires up the Clover.
Starbucks is experiencing a down-turn in same store sales because Starbucks is a luxury item, not because their coffee is bad. And there are not enough Clover aficionados who could be convinced to leave their neighborhood shops to go to Starbucks to reverse the trend. Besides, Clover's brand was built on a specialist consumer experience that does not translate to the mass-market.
"Better coffee" isn't the fix. Most consumers wouldn't know a superior cup of coffee if Juan Valdez served it to them.
The cautionary tale here is to protect your brand, because once it becomes unmoored from the reality of your business, your authenticity is lost and all the consumer is left with is a memory of an experience that they used to enjoy. Starbucks can't get back to its roots of "better coffee" because that alone won't pay the bills the same way that the tidal wave of "venti caramel macchiatos" does.