Starbucks Branching Out in Many Directions

We have three very different announcements from Starbucks. First we had news that the coffee emporium was expanding its food options with the $100 million purchase of La Boulange, with that company's pastries replacing the items Starbucks currently stocks. Starbucks also plans to take La Boulange, a Bay-area chain, national. The Huffington Post says food sales are a $1.5 billion business for Starbucks. The company says it wants to add a French flair to its restaurants. Second, Starbucks could start selling single serve K-cups in its stores next week. The company began selling the K-cups six months ago at grocers and other retailers. CEO Howard Schultz has called sales figures so far "robust." It already sells single-serve instant coffee in its stores. "For Starbucks, the move to K-cups is part of its overall strategy of becoming a broader consumer products company rather than relying so heavily on its cafe sales," writes Fox Business. And third, Starbucks has partnered with Coinstar to take coffee vending machines nationwide. The machines will offer drinks starting at $1. For a long time, Starbucks was seen as a high-end coffee purveyor. With the recession and the massive consumption of coffee and coffee drinks, the company had to let that go. Starbucks faced big business threats from Dunkin' Donuts, McDonald's, and other chains that were usurping its customers. Now it has bounced back with record sales so far this year. And while you can't argue with that success, you can make a case that the brand could be over-extending itself. Marketwatch makes that argument and a prediction: the company's stock is going to tank. Jeff Reeves says he's "bearish" about Starbucks because these moves "show a lack of focus, highlighted by some head-scratching acquisitions and product launches." The crux of Reeves' story is that Starbucks is following behind the chain restaurants that threaten their business rather than taking the lead in the areas that it knows best. Looking at the Starbucks brand, it's a little hard to tell what exactly it is now. It is a bunch of things, most of them coffee-related. Is that a good plan for maintaining a strong brand? There's a good possibility that Starbucks, in an attempt to be everything for everyone, is becoming just another thing.

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Starbucks Branching Out in Many Directions

Tonya Garcia

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Tonya Garcia