Why Starbucks’ Alcohol Cafe Experiment Won’t Work
As everyone has heard by now, Starbucks is launching new offshoot cafes under the “Inspired by Starbucks” brand in an attempt to grab some of the nightlife market. The new cafes will add alcohol to the menu, and Starbucks hopes customers will sit back and relax after a long day of work to listen to some live music and socialize with nearby cuties. It’s an interesting brainchild of Starbucks’ senior project manager, Major Cohen, but there are many reasons for Starbucks to prepare for disappointment.
With the national unemployment rate at 9.5% (myself included), it would be an obvious understatement to say this is the wrong time for Starbucks to be experimenting with a new chain of cafes. According to a story by the LA Times, 40 percent of bar owners are reporting down sales. And a quick visit to the message boards at Nightlife & Bar Magazine leads to many threads about the recession hurting business for many owners. Example:
“I have a pub in a city that has over 15 colleges in the county. I am slow and most of the other bars and clubs are also. One large club just closed a month ago. Scary.
Even though Starbucks is only experimenting with one location, it’s risky to guage the viability of a new business unit during a time when no industry is experiencing growth. People are cutting corners all over the place, and even if they try the new “Inspired by Starbucks” cafe once, they probably won’t visit continually since they’ll perceive it as a novelty not worthy of their limited disposable income.
Additionally, the nightlife industry is fickle. Customers like to visit new and different places in order to unwind. And while I may be thinking too deeply about it, Starbucks is normally associated with a pre-work ritual for most. While it’s true that a lot of people sit in Starbucks, sip coffee, and chat, it’s the first stop in the morning before heading into the office for the vast majority of their customers.
Is it possible that for the new cafe’s target market (basically, professionals who still have jobs), Starbucks may be more associated with work rather than relaxation? If I use Starbucks to gear up in the morning, I’m not sure if I’m using it to unwind at night.
About The Author
Anthony Perez
Anthony Perez is a scatterbrained insomniac with aspirations of becoming a film director. For now, he's interning at Conversation, a digital marketing agency, and doing some consulting for the marketing side of an interesting new startup called Betterfly. If you're interested in setting up a meeting with Conversation to talk about some digital and social media marketing solutions, just head over to the Conversation web site (linked above). Also check the gaming blog he manages over at Smashpad.com.
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I agree with you on the point that this might not be the best time to gauge the success of an experimental business. But I have to disagree with you that it isn’t a good idea, despite the morning ritual that Starbucks is typically associated with. I agree hat they probably make the majority of their money during the morning rush, but there are still a large amount of people who visit Starbucks throughout the day just to chill out and work. How many times have you gone into a Starbucks to work only to find that all the seats are taken? It happens to me all of the time.
People will still drink coffee and will go wherever their favorite java is to get it, regardless of how the economy is faring. It’s like having internet access at home. At this point, most people feel it’s just a necessity of life and have been so accustomed to having it that they’re not going to easily cut it out, even if their wallets are crying for help. That said, I think with the proper level of sincere community involvement, and enough things to truly differentiate itself from the general store, I could see the idea taking off. I’d go.
I certainly can see how it would be an interesting idea, but I’m not sure if it’s the most viable business opportunity. The only markets in which Inspired by Starbucks cafes are large cities who are known for their nightlife options. Now, Starbucks definitely has the brand power to possibly pull it off, but I don’t know if it’d turn into the place into a top of mind option for happy hour. By the way, does serving alcohol hurt their brand? I’m torn on that one. I don’t think it does. What do you guys think?
I actually covered this as soon as the news broke last week and I have to say I Really agree with your assessment. I think they’re key mistake, and what will lead to the downfall of this ‘de-branding’ is that it’s targeting the wrong issue, namely, design & atmosphere, rather than value & recession oriented spending. The starbucks brand is one of luxury and expense – Until they do something to negate that image, no amount of alcohol, music, or coffee, is going to drive people through their doors.
- David (Aerocles)