Warming Up Starbucks

I think returning Starbucks CEO Howard Schultz is doing a good job so far. He’s the one that put the coffee chain on the map and, as with Steve Jobs at Apple, was exactly the right guy to come back and get the business back on track.

One of his best ideas so far has been seeking your ideas for how to improve Starbucks. The company has a website called My Starbucks Idea where you can throw out your ideas, see what other customers think, and even watch as the company puts various ones under review, shows which ones are already in development, and otherwise reveals status.

Some of my favorite suggestions from among the most popular are:

  • Finally, offer free wi-fi access.

  • Offer a free birthday drink.

  • Create a punch card where frequent sippers get every 6th or 11th drink free.

  • Sell a healthy breakfast.

  • Make a swipe card so regular customers can scan or swipe it inside the door, pay directly with the card, and have the order go straight to the barista so the card holder can skip the register line.

This gathering of ideas from customers is a great, free way to see how to make Starbucks exciting again.

We’re long SBUX because I don’t see any reason it won’t recover. Two years ago, the stock was almost $40. Today, it’s under $18. Sure, there are reasons for the decline, chief among them a weak consumer in the midst of recession and higher food costs, but the business is a winner. Look at the revenue history in millions of dollars:

1998 $1,309
1999 $1,680
2000 $2,169
2001 $2,649
2002 $3,289
2003 $4,076
2004 $5,294
2005 $6,369
2006 $7,787
2007 $9,412

You don’t want to miss that kind of revenue growth on sale.

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