First, they sacked their CEO and reinstated founder and chairman Howard Schultz in the position. Then Schultz announces that the brand has lost its way and promises to close stores and re-focus on core offerings. Next, McDonald’s, sensing vulnerability, announces it will open 14,000 coffee bars and go mano-a-mano with the once unrivaled coffee king.
And how does Starbucks respond? It begins testing $1 cups of coffee in its hometown of Seattle. That’s right, the guys who dazzled marketing professors everywhere by convincing Americans to pay $4 or more for a cup of Joe, have blinked.
One can almost sense the panic that must be pervading the hallways of Schultz’s once-proud empire. Slashing the price of its coffee flies in the face of everything Starbucks stands for, and should give a monumental image and reputation boost to McDonald’s gamble.
The Starbucks move makes as much sense as Lexus suddenly offering a cheap, ‘starter car,’ Gucci licensing body tattoos or Zegna selling designer overalls.
These are the times that try men’s souls and now is the time for Howard Schultz to stand firm and hold the line on pricing and brand consistency.