In Sue Morelli’s world, extensive customer research is the catalyst for all innovation.
Morelli, president and CEO of Boston-based Au Bon Pain since 2005, has systematically put her stamp on the bakery café by paying close attention to others.
“We do a lot of guest research and, in fact, just finished with a pretty major focus group of more than 50 hours with our heavy users,” Morelli says.
During her presidency, Au Bon Pain introduced a new product line called Portions, which features a selection of 14 dishes made fresh daily, packaged individually. Each one is 200 calories or less. The Portions line focuses on vegetables and proteins as the main ingredients, retailing for $2.99 (without meat) or $3.49 (with meat).
“Innovation is a great word, and it’s complex,” Morelli says. “It has a lot of components: consumer trends, culinary savvy, and talent. And at the end of the day it has to be grounded by product profitability, the economics have to make sense.”
According to Morelli, another area heavily impacted by research is speed of service. Au Bon Pain recently underwent a major remodeling program, introducing a design that allows customers to serve themselves.
As a result of the recession, Morelli says consumers are doing more with less. In an effort to capitalize on the new reality, she is pushing the chain to offer “better basic foods that are affordable, fresh, and nutritious and served with speed and warmth.”
The 240-unit Au Bon Pain, which means place of good bread, is poised to grow both domestically and internationally.
“We keep a close watch on all the competitors, from fine dining to quick service,” she says. “Our executive chef, Tommy John, has the power to drive the concept. He has an extraordinary pulse on the consumer palate.”
The company, which was founded in 1976, rolled out a new café called the Bistro in 2006 and has a wide range of real estate applications to offer. In addition, the chain was recognized for its use of touchscreen terminals that offer nutritional information to the guests.
“In our business it is just so easy to put stuff out there and test it,” Morelli says. “Patrons are looking for higher quality at the same speed they used to get quick service, and they have a real good sense of what is real quality.”
Few would deny that Howard Schultz is singularly responsible for what is best described as a coffee revolution.
As chairman and CEO of Starbucks, Schultz has taken his desire to create a company with soul and ridden the innovative waves through many highs and lows.
Schultz, who had ceased overseeing the company as CEO for eight years, was called back into service in 2008.
In Starbucks’ latest wave of innovation, he and his creative team have taken an old favorite, instant coffee, and repackaged it. And it has arrived with significant fanfare.
“We have worked for nearly 20 years to develop an instant coffee that offers customers the quality and taste they expect from fresh-brewed Starbucks coffee, and a unique and convenient way for them to enjoy it,” Schultz says. “This is a big move for us—the opportunity to reinvent a category, create new rituals, and grow our customer base is substantial.”
Since joining Starbucks in 1982 and buying it in 1987, Schultz has overseen and inspired numerous innovations, not the least of which was creating a warm atmosphere that customers want to visit time and again.
Serving the first latte in 1984 introduced many Americans to espresso beverages. In 1987, FlavorLock technology allowed Starbucks to ship freshly roasted coffee to customers far away, opening up international markets.
Then, in 1996, Starbucks moved popular beverages to grocery shelves around the world. Along the way music infused the Starbucks experience, and several noncoffee items were offered for sale.
It also can be argued that the chain created a whole new vocabulary for ordering coffee and gave customers an entire language by mastering the Starbucks menu. Tall nonfat latte, no foam, anyone?
In the foodservice industry, Starbucks distinguished itself by being one of the first companies to offer employees working at least 20 hours per week comprehensive health coverage and an employee stock-option plan.
Those moves contributed to one of the lowest turnover rates in the industry and also improved employee morale.
Through it all Starbucks continues to prosper. In the first quarter of fiscal 2010, ended December 27, 2009, Starbucks reported $2.7 billion in revenue, a 4 percent increase over the same quarter a year earlier. Store unit count now numbers more than 11,000.
Despite these many successes, Schultz continues to push his team of more than 142,000 partners forward.
“Starbucks is known around the world for not only serving great coffee, but for continually innovating and listening to our customers along the way,” says Dub Hay, Starbucks’ senior vice president of coffee and tea. “Pushing the limits of what others think will work is nothing new for Starbucks.
“We believe the market is ripe for this innovation—we will continue our journey of listening to consumer’s needs, and providing them with great-tasting solutions.”