Note to Starbucks: You’ve lost a loyal customer.
By: Dr. David Martin
Tags: Branding, Brand Strategy, Coffee Shop, Coffee Culture, Business Strategy

These Photos by Unknown Authors are licensed under CC BY

Note to Starbucks: You’ve lost a loyal customer.

You’re not selling coffee; you’re selling community. That’s your brand; protect it.

I’m sitting at Starbucks, feeling mildly annoyed. But I’m not sure who is the real culprit of my chagrin, Starbucks or the Post Exchange management. Between the two of them, they have succeeded in destroying the coffee community on Camp Humphreys.

This coffee shop is too small for a Starbucks. All three Starbucks locations on this post are crammed into the smallest spaces — not open and inviting like most other good coffee shops are. The tables are crammed together — just now, the couple next to me left the store to find a better place to sit. This shop is full of loud, screaming kids. All of the shops are next to the highest traffic areas on the post. It’s great for maximizing profits but horrible for those of us that have come to see Starbucks as a beacon of the coffee shop culture. We expect more from Starbucks.

Howard Shultz, who was Starbucks CEO from 1986 to 2000, said that a coffee shop was more than just selling coffee. It was about creating a community gathering place, a place where people wanted to hang out, meet their friends and acquaintances, do business in a relaxed environment, or just a relaxing place to read a good book. It was more than a place to buy coffee; it was a ‘third place’ where people came to socialize. Howard said, “Coffee is the product, but it’s not the business we’re in.”

This concept of community was lost when Starbucks and the Army and Air Force Exchange Service (AAFES) negotiated their agreement to place three Starbucks at Camp Humphreys, the main U.S. Army installation in South Korea. While I have no idea about the specifics in the contract, it’s pretty clear that the locations on the post were chosen to maximize traffic and sales, and little, if any, thought was given to developing any sense of community.

I have decided to take my business elsewhere. My drink of choice is a nice black cup of Americano — in essence, just a cup of coffee. At Starbucks, it will cost me $3.95. At my local Exchange Express outlet, the same cup (OK not the same blend, but black coffee is black coffee) will cost me $1.79. So why am I willing to pay more than two dollars more per cup?

I’m willing to pay for the sense of ambiance; the sense of community. I am willing to pay more for what is essentially the same product? Not. So. Much.

So I’ve decided to stop my trips to Starbucks — at least the ones on the post. I’m so used to going to nice coffee shops that have the ambiance, the ‘third place’ feel that I’m unwilling to pay a luxury price for coffee if the atmosphere is missing.

I’m going back to my hang out off-post at the local Ten Dogs Cafe. It’s a hassle to get to, and an Americano there costs 6,000 won (about $5.50). But it has the ambiance, the feel of the community, the spirit of a ‘third place.’

A successful retail coffee shop is all about branding — it’s more than pure profit. Unfortunately, because of the absolute control the Post Exchange service has over which external vendors can come on base, Starbucks Korea has decided to optimize profits over staying true to the Starbucks brand. You can see this when you visit any Starbucks off-post; they look and feel like any other coffee shop — and they have the typical coffee shop ambiance that made the Starbucks brand known the world over. It’s an ambiance that was sacrificed in the name of profits on-post.

Which is why I’m going back to my favorite off-post hang out. That’s a shame because I’m a typical loyal coffee shop patron that any good cafe would love to have.