Starbucks Revs It Up

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It was another year steeped in success at Starbucks Canada, a prominent top-10 player on F&H’s 2012 Top 100 report. Infused by percolating progress on a number of different levels, the perennial coffee-brewing favourite grew again last year, expanding its store base of 1,130 Canadian outlets by more than 50 and posting sales of $1.2 billion, moving them onto F&H’s Top 10 Report for the first time.

“We continue to focus on operations excellence,” Colin Moore, president, says of the past year. “Our people strive to provide the Starbucks experience with the highest quality coffee and customized, hand-crafted beverages.” Still, Moore demurs to pick just one key driver of success. Certainly the organization made myriad meaningful improvements over the last year.

To start, the My Starbucks Rewards loyalty program acknowledges shoppers who spend their joe dough at Starbucks, with every loyalty-card purchase scoring a “star” to be redeemed for free drinks, refills and syrups. 

The company also launched its blonde roast coffee earlier this year, appealing to the 40 per cent of Canadians who prefer lighter-bodied and mellower brews.

And Starbucks spent 2011 revisiting the physical space of a fair chunk of its portfolio by refurbishing coffeehouses to fit seamlessly within a neighbourhood, delivering scant environmental impact. Each new and renovated store draws from one of four design styles: heritage, artisan, regional modern or concept. No matter the decor, the aim is to furnish customers with “a welcome place to relax, enjoy free Wi-Fi and socialize,” says Moore.

Speaking of physical space, the company enhanced its drive-thru services, simplifying menu boards with easy-to-decipher graphics, updating POS systems and adding equipment to increase the speed of service. All of these improvements, says Moore, including the modification of store layouts so workflow is better streamlined for associates, “have reduced out-the-window time and increased our throughput and productivity, an important consideration given that Starbucks has approximately 175 drive-thru stores within its Canadian portfolio.

The Canadian brand president acknowledges the company endured hiccups in 2011, including extremely high coffee commodity costs, increased fuel charges that have added to distribution logistics expenses and an unexpected minimum wage hike in B.C. All, says Moore, have prompted the company to increasingly monitor other operating costs and discretionary spending.

But, the future is bright as Starbucks is on the precipice of another significant development in the world of single-cup coffee sales. In addition to the K-Cups for the Keurig Single-Cup Brewing System the company is poised to unveil, it’s announced plans to  launch its proprietary single-serve machine this fall. Verismo will allow customers to produce brewed coffee, espresso drinks and lattes at home.

In addition, by March of next year, Target will host Starbucks in at least 125 new Canadian locations.

Starbucks has a healthy model. “Our future is very bright, and we have excellent business momentum,” says Moore.

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