Industry News | March 11, 2008

Starbucks Closing Had Little Affect on Consumers

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The publicity surrounding the closings of all 7,100 Starbucks stores two weeks ago for three hours for employee training caused minor inconveniences to coffee drinkers and little gain for competitors, according to global research firm Synovate.

The company's survey, conducted with 1,000 nationally representative U.S. adults, asked coffee drinkers whether they knew about the store closings, how it impacted them, and whether they chose to visit the competition instead for their coffee fix.

The survey showed that Starbucks' timing was ideal, with only about one in 10 respondents saying they planed to purchase coffee between 5:30 p.m. and 8:30 p.m.

Ed Murphy, senior vice president of Synovate's U.S. Retail & Restaurant Group, says, "With so few consumers purchasing coffee in the evening hours, and less opportunity for competitors to capitalize on the closings with their own discounts, the impact on Starbucks' business was minimal."

The vast majority (94 percent) of consumers said that Starbucks' closing did not impact them in any way.

Three-quarters of coffee drinkers surveyed said that they were aware of the closings. However, they were less aware of exactly why the stores were being closed, with only half knowing about Starbucks' employee retraining efforts. Very few customers thought that the closings would have a positive impact in the long run as only 3 percent said the closings prove that Starbucks is improving service.

Murphy says, "Understandably, Starbucks wanted to avoid revealing the store closings in advance. However, in the days leading up to the closings, they may have missed a good opportunity to repeatedly emphasize their commitment to providing superior customer service."

The majority (88 percent) of Starbucks customers surveyed claimed to have purchased coffee from another store when Starbucks was closed while a small group of loyal customers (12 percent) waited for the store to reopen to get their java.

About one-fifth of those that purchased coffee when Starbucks was closed purchased it from Dunkin' Donuts with fewer visiting McDonald's (14 percent). Specifically among Starbucks customers, about one-quarter purchased their coffee from Dunkin' Donuts while another 10 percent purchased from either McDonald's or Panera Bread.

Dunkin' Donuts 99 cents latte offer, held from 1 p.m. to 10 p.m. on the same day, appears to have had little impact, with only 3 percent of respondents claiming they purchased a latte there. However, even though latte purchases at Dunkin' Donuts were low, two-thirds of those purchases were made while Starbucks was closed.

More than half (55 percent) of those that purchased the Dunkin' Donuts 99 cent latte claim they will definitely or probably purchase Starbucks coffee less frequently, while about 80 percent of consumers said they are "very likely" or "somewhat likely" to visit Dunkin' Donuts again.

This can potentially be attributed to the fact that the vast majority (84 percent) of customers that purchased Dunkin' Donuts 99 cent lattes were positive about the experience.