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Louise McCready

Louise McCready

Posted: September 4, 2008 04:44 PM

Starbucks: Cutting Calories to Raise Profits

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Starbucks customers ready to order a latte and cinnamon twist noticed a few menu changes this week. At 11,570 U.S. and Canada locations, five wholesomely titled new breakfast items appeared: "perfect oatmeal," "berry stella" pastry, "chewy fruit and nut bar," "multigrain roll," and "apple bran muffin." Select Starbucks even offer a "power protein plate" or "spinach feta wrap." Has Starbucks caught the nutritious bug?

Marketing these low-calorie additions as part of a "guilt-free" breakfast, these additions are high in whole grains, fiber, and Omega-3 fats, without high fructose corn syrup or any artificial flavors or sweeteners. Referred to as "Morning Source," this healthy fare is Starbucks' latest attempt to revive plummeting stock prices and a tarnished reputation.

CEO Howard Schultz led the way on this twenty-first century health nut bandwagon after experiencing his own mid-life, baby-boomer health scare. Schultz promises to reinvent the lunch and dinner menus in 2009, but I don't predict healthy snacks will prevent Starbucks' continuous decline in an unstable economy where even milk prices are soaring.

Humans have drunk coffee since the ninth century, and the brewed beverage first arrived in Europe in Venice in 1615. Coffeehouses were places where intellectuals met and debated, and thus coffee was associated with the upper class. After the invention of instant coffee in 1901, coffee went from the nectar of gods to a legal stimulant for the masses.

When Starbucks was founded in 1971, it offered brewed coffee and tea, whole bean coffee, tea and spices. Recognizing that people like choices, the company continued adding shots and syrups. Today, a customer's personalized creation is as individual as their fingerprint, but this has been a disastrous year for the former king of coffee. Starbucks cut one thousand office jobs, six hundred stores are closing (including eleven in New York City) and its stock is down twenty-five percent.

New Yorkers have experienced sticker shock since July's public health measure went into effect requiring fast-food and chain restaurants to post calorie information. Overnight customers learned their blueberry scone and grande cinnamon dolce frappuccino breakfast set them back 860 calories -- three hundred calories and over $3 more than a glazed donut and caramel swirl latte at Dunkin' Donuts.

After the installation of ovens for warm breakfast sandwiches backfired (the smell of freshly baked bread clashed with the aroma of roasted coffee), other than redesigning its iconic mermaid logo, how could Starbucks compete with the less expensive McDonalds' McCafés and Dunkin Donuts' espresso-based drinks?

In the latest Rasmussen Reports national telephone survey, 73 percent of adults say Starbucks Coffee is overpriced. 76 percent of adults say they visit the ubiquitous coffee shop rarely or never; 14 percent go occasionally and only 8 percent go in once a week. Starbucks tried to woo customers by inviting them to stay for a bite and surf the web, but according to the same report, 80 percent of adults go for the coffee, 5 percent for the food and 8 stay for wireless.

Today, "local" and "organic" have replaced "fast" and "easy" as buzz words and "healthy" just isn't enough. Eliminating refined sugars is good; homemade, gluton-free cookies are better, but not feasible on a corporate level. Fuel prices are high and consumers are feeling the pinch. Starbucks, Dunkin Donuts and McDonalds are monoliths struggling to adapt to consumer demands in an era where the pendulum is swinging back to quality over quantity.

It's time for both customers and companies to wake up and smell the calories, and maybe Starbucks should stick with what it does best: coffee.

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