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Has Starbucks Training Brewed Heightened Expectations

February 29, 2008
Related Topics: Basic Skills Training, Featured Article
It’s been nearly one week since Starbucks briefly shut down its stores and reintroduced its baristas to the fine art of brewing specialty coffees. Now, the question for the Seattle-based coffee retailer is simple: Do customers notice discernible improvements in their Starbucks experience, or does the employee training amount to little more than froth and foam?

   Starbucks closed all 7,100 company-operated stores for three hours on February 26 in what returning CEO Howard Schultz described as a "comprehensive educational curriculum for all U.S. store partners." Its ostensible goal was to "provide a renewed focus on espresso standards" and reignite employees’ enthusiasm for customer service, Schultz said in a statement.

   "We are very pleased with how the training went. We’ve heard from [store employees] that they appreciated the time to focus on espresso excellence and refresh their skills," Starbucks spokesperson Bridget Baker told Workforce Management.

   Although the stated emphasis was on creating perfectly blended caffeine concoctions, experts say there is a distinct marketing angle behind the well-publicized sessions, which centered on 135,000 store employees. It enables Starbucks to highlight employees’ coffee-making expertise while helping reposition the brand amid flagging sales and stepped-up competition.

   It fits nicely with Schultz’s "third place" strategy, says Terry Schindler, a professor of management at the University of Indianapolis.

   "Schultz wants Starbucks to be the third place where people congregate over a cup of coffee, besides home and work," Schindler says, and that means delivering a blend of coffees that is superior to its competitors.

   Like other high-end retailers, Starbucks faces an uncertain economy. People are guarding their disposable income, rightfully fretful about gasoline that has gone north of $3 a gallon in many parts of the country and worried about whether the economy is sliding into recession.

   Against that backdrop, many consumers may view Starbucks’ $4 lattes as a luxury they can’t afford. Moreover, on-the-go coffee drinkers have lots of other choices, thanks to McDonald’s and Dunkin Donuts, both of which have launched their own lines of lower-priced specialty beverages.

   McDonald’s, in particular, is proving to be a thorn in Starbucks’ side. Consumer Reports named McDonald’s premium roast coffee the best in a recent taste test, beating out Starbucks, Dunkin Donuts and Burger King.

   Losing to a fast-food chain had to be a crushing blow, and probably contributed to Starbucks’ decision to make a big deal out of its barista training. Starbucks also hopes to milk the extensive press coverage of its in-store training to reinvigorate its brand, an approach that Schindler says is especially critical since the company doesn’t advertise much.

   Perhaps taking a cue from Dunkin Donuts, which Schindler says derives 70 percent of its revenue from coffee sales, Starbucks is returning to its roots by selling mostly coffee and eliminating items such as warm breakfast sandwiches. Also in the works are plans to sell $1 cups of coffee with free refills, following in the steps of McDonald’s—and to offer free wireless Internet access to entice customers to linger longer.

   Starbucks touts itself as a company big on social responsibility and cementing long-term relationships with customers and employees, but when it came to talking about the training, employees were instructed to be closemouthed with the media.

   Jess Carpenter, who manages a Starbucks store in Richmond, Virginia, declined to answer questions about the in-store training when contacted by Workforce Management.

   Starbucks’ corporate line is that the training will pay immediate dividends. Says spokesperson Baker: "We believe that the investment made in this training will have a significant impact on our customers’ experience. After completing the training, our partners signed a promise to exceed customers' expectations by delivering the perfect drink every time."

   The signed pledges will be prominently displayed at Starbucks stores, Baker says.

   Alex Frankel learned about Starbucks’ culture and approach to training during a three-month stint at a San Francisco-area store in 2005. Unbeknownst to Starbucks management, Frankel applied to work at the store as research for his book Punching In. Frankel’s research for the book also included brief stints at other well-known companies, including Gap, UPS and Enterprise Rent-A-Car.

   Frankel says he was surprised at how little formal training he received upon being hired at Starbucks. He was handed several training manuals and given time to leaf through them at work, "but that didn’t really teach me very much about the skills I’d need."

   Most of his learning occurred on the job, but little formal instruction was offered on the art and chemistry of Starbucks’ various brews. For example, the longest training session Frankel attended was a four-hour orientation that revolved mostly around instilling the company’s corporate values.

   Frankel says Starbucks is feeling the effect of years of rapid expansion, a situation that points up the need for more and better training.

   "They’ve had to relax their hiring standards the last few years as they’ve grown so quickly. That essentially is what they are paying the price for now," Frankel says.

   In fact, Starbucks plans to open 2,150 new stores globally in 2008, about 650 of which will be company-operated locations in the U.S., according to recent financial statement filed with U.S. Securities and Exchange Commission. Another 525 U.S. locations will be run as licensed franchises. Through December 30, 2007, Starbucks posted consolidated net revenue of $2.76 billion, a one-year jump of 17 percent.

   Starbucks’ three-hour training initiative may be a bit of a gamble, Schindler says. It could raise questions in the minds of consumers, who otherwise wouldn’t have thought about quality and service issues.

   "The risk is that customers are going to expect things to be much different" this week and next the weeks after that, Schindler says. They could switch loyalties if their expectations aren’t met.

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