Expresso Espresso coffee shop (EE) opened in March 2006 across the street from the University of South Alabama in Mobile. The shop targeted the 13,000 students as well as the faculty and staff. Todd Sylvester, the owner, has big dreams of expanding to another location. Although the business concept offered a warm environment with high quality products, it lacked sustainability, market knowledge, and competitive options. In spring 2006 the business was operating at a negative net-income. The following report explores the case of EE during the spring of 2006 and discusses alternative courses of action to current business strategies.
The biggest name in the coffee industry is Starbucks. Starbucks is gaining much ground by expanding rapidly in
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The margins are not there for them to be profitable. The owner does not want to raise prices because he has his core customer base that are his friends and he wants to cater to them. That is important but at the same time he needs to realize this is his brand and his business. The bottom line is making money. You can see some spots where he can cut costs and improve his margins. The articles state that the last thing a customer going to get coffee is thinking about is how much they will spend for that cup of coffee. If there is a friendly atmosphere that caters to the customer they are happy to pay that extra $1 for a cup of coffee. Promoting how they brew their coffee is of utmost importance when raising prices. It has to be clearly explained why their prices are what they are and educating the customer on how their coffee (Espresso) is made will help with that process.
EE is currently operating at a negative net-income. They are spending more on operating costs than they are making a month. In order to break even Todd needs to do around $24,000 worth of sales each month.
EE does not currently have the funds to open another location. It would not be smart of Todd to expand when he’s not able to keep his current store in the positive. Todd should spend more time working at this current business and trying to make it better. Me might not be able to work for the church while also running his store. He needs to put more time and energy into his own store. This
The specialty coffee industry had seen steady growth for years and the trend was expected to continue until at least 2015. Of the various segments within the specialty coffee industry, most of the growth was attributable to beverage retailers “Coffee and kiosks”. In 1979 there were approximately 250 specialty coffee retailers. The number quadrupled by 1989 to approx 1000 outlets, and it exploded to roughly 15000 by 2002. Nationally, specialty coffee sales totaled over $ 10 billion in 2005.
In the US, specialty coffee is a $5-billion industry with a 20% growth rate (House, 2013)
As the world’s number one specialty coffee retailer, Starbucks sells coffee drinks, food items, coffee beans, and coffee-related accessories and equipment. In addition, Starbucks sells whole-bean coffees through a specialty sales group and grocery stores. Starbucks has grown beyond coffee into related businesses such as coffee-flavoured ice cream and ready-to-drink coffee beverages. The purpose of this paper is to analyze Starbucks business strategy, customer value proposition, company’s operations and the risks to financial results and reporting in the short term.
Within the coffee industry Starbucks Corporations has grown from a small shop to a leading coffee distributor, proving to have financial strength and determination to continue growth. With the weakening economy the continued success of Starbucks
While the leading drinks in 2004 were espresso-based beverages with sales averaging $50,395 per store, drip-brewed coffee beverages – which Expresso Espresso does not offer – came in second at $33,336 per store. It is understandable that Todd insists on providing quality products, but refusing to add drip-coffee beverages to his menu is the equivalent of refusing to cater to his customers’ needs. Unlike any of the local competitors, Expresso Espresso and the eventual Starbucks are the only Mobile coffee shops that offer a drive-through service. The drive-through contributes to 40 percent of Expresso Espresso’s total revenues, so needless to say, it’s a very important contributor to the business. If Todd hopes to stand a chance against Starbucks, his biggest competition, he will need to add drip-coffee beverages to his menu. Otherwise, it will be just as easy for a customer to drive off 400 feet east to Starbucks and request a drip coffee there instead.
Starbucks is dominant coffee brand in North America, which also is well-known worldwide. Established in 1971 as coffee shop oriented to a niche of coffee purists, in late 1980’s it turned to be a constantly growing chain of stores that sold whole-beans and premium-priced coffee to mostly affluent, well-educated customers. In years 1992-2002 company was showing at least 5% annual growth. And by 2002 Starbucks was serving already 20M customers in 5886 stores (both operated and licensed) around the globe, had $3.3 billion net revenues and was opening 3 new stores a day in average.
Starbucks Corporation, generally known, as Starbucks Coffee is the leading retailer and a brand of world’s forte coffee in the world, with more than 15,000 retail locations in North America, Latin America, Europe, the Middle East and the Pacific Rim, wherever in this world where premium quality coffee is in demand. Starbucks is the largest coffeehouse company in the world ahead of UK rival Costa Coffee, with 20737 stores in 63 countries and territories, including 11910 in the United States, 1496 in China, 1442 in Canada, 1052 in Japan and 772 in the United Kingdom. The first Starbucks was open in 1970. The name was inspired from Herman Melville’s Moby Dick, a definitive American novel regarding the 19th century whaling industry. The nautical name matches seamlessly for a store that imports the world’s finest coffees to the cold thirsty people of Seattle. In May 1998, Starbucks have finally successfully entered the European market through its acquirement of 65 Coffee Company stores initially originated from Seattle in the UK. Both companies shared a common culture, focusing on a great commitment to customized coffee, similar company values and a mutual respect.
The first opportunity is that over 50% of eighteen year olds and older drink 3 or more cups of coffee per day in the United States. This group of coffee drinkers consists predominately of college students and career professionals who adding the morning cup of joe to their study time or work schedule. Currently in the coffee industry, competition is minimal for Starbucks, which has allowed Starbucks to capitalize on one of the biggest industries in the world behind crude oil. This
Moreover, most of the people know the brand Starbucks as the leader of the coffee industry. It is enormously successful and it comes out with no surprise that this will be used as benchmarking against the study of Dunkin’ Donuts.
The targeted industry is coffee shop for this business venture. According to the latest research from the NPD Group, the coffee shop industry continues to thrive in the evolving economy [1]. In the past years, out-of-home coffee servings have fallen by more than 3%, but while the visits in coffee shops remained flat. Even though the marketplace is challenged, the market is still huge [2].
Starbucks’ lead in the specialty coffee industry exemplifies the result of deftly executing a well-planned business strategy. Moreover, Starbucks is well positioned for what is expected to be a continuing rise in the popularity of specialty coffee products. The question before Starbucks’ leadership, however, is what avenues will lead to Starbucks’ goal of remaining true to its core, the highest quality coffee products while providing a “total coffee experience” for its customers?
Coffee has become a significant part of lifestyle of numerous people. Starbucks has opened its first coffee shop in in Seattle, Washington, USA in 1971 (“About Starbucks,” 2014). The Starbucks is very popular today and has more than 6,000 locations in over 30 countries. In addition to coffee and espresso drinks, people now enjoy Tazo tea and Frappuccino (“About Starbucks,” 2014). The main target of Starbucks is to be the consumer’s favorite coffee shop. The globalization of the businesses increases competition in the food and beverage industries. Starbucks is the most successful and competitive coffee chain on the market. The aggressive strategies of expansion pushed the competitors such as McDonalds or Dunkin Donuts
In general the coffeehouse industry in the United States was experiencing an increase in coffee consumption per capita due to the “Starbucks effect”. At this time Starbucks was operating approximately 20,000 stores in the United States and was living a fast expansion strategy worldwide.
Starbucks is undoubtedly dominating the coffee industry, however that does not exclude the entry of new rivals. For example, McDonald’s, Burger
I would like to propose a marketing plan for opening a coffee shop in the city of Moscow. Over the past two or three years, a coffee shop in Russia managed to grow in a socio-cultural phenomenon: at once there was like a house of cards, the Soviet culture of consumption of coffee.