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Starbucks at a Crossroads

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I take my coffee black.

Airplane jokes aside, at its very best a cup of hot black java from Starbucks (Nasdaq: SBUX  ) is a sublime experience -- the complex combination of flavors and aromas make for one of life's simple pleasures. At its worst, it's just a half-warm buck-fifty cup of blandness.

Unfortunately, I've been seeing too much of the latter recently. Other connoisseurs are seeing inconsistencies in Starbucks' blended drinks, such as lattes and cappuccinos. Management is aware of the problem, but can they fix it?

Time's ravages
As most black-coffee drinkers will tell you, it doesn't take much for the taste to deteriorate. The most common culprit is time: The longer it sits in a vat, the worse it tastes. There are other issues such as whether a vat is cleaned before it's reused.

I cannot get a consistent cup of coffee at Starbucks. Its quality control is awful. I consider this most strange for a major corporation whose very mission revolves around the customer experience.

Consider the simple question of how often a new batch of java is brewed. You would think this -- the most basic task in the store -- would be the one thing Starbucks baristas would have down cold (or piping hot). Not even close. I frequent several stores, and I've made it a point to survey the staffs about brew times. Here's a sampling of my conversations:

  • "I think we're supposed to brew a new batch every 50 minutes." Seriously? "Or maybe it's every 40."
  • "We don't brew new batches until the vats are empty, and there's still a cup or two left in this one." (I have not returned to this Starbucks, even though it's the most convenient location for me.)
  • "We're supposed to brew every eight to 12 minutes, depending on how many vats we're using." Do you actually do that? "Not always."

And then there's another location, which doesn't serve the bold brew of the day until after noon. Noon! Just today I looked forlornly at the Pike Place vat -- its countdown timer long stopped at zero -- and asked if it was fresh. "Yes" came the lie.

Coffee's crossroads
Those who put cream and sugar in their coffee probably don't see as much inconsistency as I do. However, the company itself realizes it has a problem with its lattes, cappuccinos, and other mixed and blended concoctions. Headquarters recently issued orders for its baristas to slow down in making these drinks, and for them to concentrate on the quality of each one. More cleaning of pitchers, no more making several drinks at a time, etc.

This proclamation caused a bit of complaining among baristas (and customers) about longer lines and increased wait times, but I think it's the right move. I realize there are folks who just want to get in and out of the store and don't particularly care much about the consistency. But I assume management realizes the value of a consistent, superior experience and is acting accordingly. I mean, we're talking about harming a hugely valuable brand here.

McDonald's (NYSE: MCD  ) has built an empire on consistency. It, along with Dunkin' Donuts and others, is going after coffee drinkers in a big way. Peet's (Nasdaq: PEET  ) and Caribou Coffee (Nasdaq: CBOU  ) are aggressive competitors. Green Mountain Coffee Roasters (Nasdaq: GMCR  ) and its amazing Keurig system produces a consistent cup time after time.

Starbucks should worry about its ability to do the same things the same way, over and over and over again. I'd like to tell you that none of these guys brews better cup of black coffee than Starbucks, but sometimes they do when Starbucks slips.

Management needed to step up, and I'm glad it did. The Starbucks brand -- and what a powerful one it is -- depends on it. I can only hope the company takes the next step and extends the quality control to its flagship black coffee.

The Steve Jobs Betrayal
You may already know that in the final year of his life, Jobs revealed a stunning betrayal — and told his biographer, "I will spend my last dying breath... and every penny of Apple's $40 billion in the bank to right this wrong." What was it that made Jobs so irate — and why could it make a few in-the-know investors some major profits over the coming months and years?

Enter your email address below to find out what made Jobs so enraged!

Caffeinated Fool analyst Rex Moore particularly likes the Starbucks Sumatra and Komodo Dragon blends. He owns no companies mentioned here. Peet's Coffee & Tea is a Motley Fool Big Short short-sale recommendation. Green Mountain is a Motley Fool Rule Breakers selection. Starbucks is a Motley Fool Stock Advisor recommendation. Motley Fool Alpha has opened a short position on Green Mountain. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 07, 2011, at 5:21 PM, swagv wrote:

    Its quality controls have been poor for a number of years now. Chains supposedly purport the value of consistency, and in the coffee reviews I regularly do for hundreds of cafés, I've found Starbucks' ratings to have a high standard deviation.

    What you get not only can vary a lot from location to location, but even in the same store. I can't tell you how often my last employer used to literally send back orders with the message, "Please remake mine so it doesn't taste like ass."

  • Report this Comment On February 07, 2011, at 5:27 PM, ETQ12 wrote:

    Every time I try Starbucks it tates "burnt". Maybe I am too picky.

    I drink illy coffee at home and wherever I can find it. That is what everyone in Europe and Near East drinks. Once you have illy you cannot go to anything else unless it is similar coffee.

  • Report this Comment On February 07, 2011, at 6:07 PM, ergon1216 wrote:

    1. Quality varies from store to store. There are some really good stores and more where the black bold is always old and burnt.

    2. What is "illy" coffee?

  • Report this Comment On February 07, 2011, at 6:17 PM, xetn wrote:

    Given the citations in this article, one has to wonder why you continue to frequent Starbucks. Did you never hear about voting with your dollars?

    But then, I never could wrap my mind around paying an outrageous price for a cup of coffee. (I still remember the "never empty" $.05 cup of coffee that turned over so often it never was stale.

  • Report this Comment On February 07, 2011, at 7:09 PM, ETQ12 wrote:

    "ILLY" is an Italian Brand carried by William Sanoma and Bed, Bath and Beyond. It is also available in high end hotels.

    I get my coffee directly from ILLY. They sell their espresso machine for $120 instead of $350. Their coffee, either pods or cartridges is heavenly.

    It is better than Lavazza Coffee which I believe is also Italian. Starbucks is like a yugo next to a lexus compared to the above.

    Do not take my word for it. Try it. Box of 18 pods usually cost around $16 so you get make an espresso or cappochino for $1.00 or less.

  • Report this Comment On February 07, 2011, at 8:31 PM, nasis wrote:

    I find the espresso at Starbucks to be consistently excellent. And I find there's much worse inconsistency in the world with espresso compared to drip coffee.

  • Report this Comment On February 07, 2011, at 8:43 PM, navygupta wrote:

    I have experienced much lower quality/taste of their Pike's Place blend and they don't seem to stop raising the prices on it. No thanks.

  • Report this Comment On February 07, 2011, at 9:44 PM, ET69 wrote:

    I don't drink alcohol or smoke but my one love is coffee. I live is Seattle so we take this stuff seriously.I go coffee tasting with friends. Hell I spent $7.00 for 1 CUP of micro brewed black coffee from a micro-lot last week and it was worth it! Yes I do have my favorite coffee shop and baristas but they are not all over the world and for every great mom and pop coffee shop I find --I find 20 that are pure crap. I have been in over 50 countries and the same is even more true over there.

    Starbucks today is a shadow of years gone by true but then can you imagine trying to control the quality of 15,000 stores ? All in all they don't do a bad job but it can't be like the mom and pop outlets that really do it right.

    The only way to really test coffee is to drink it black but the fact is very few people drink their coffee black...thus the "burnt" brew that Starbucks has become known for. I think they use that taste because they know that the vast majority of people put all kinds of sweeteners/flavors and milk in their coffee. The coffee is "burnt" so their there is some element of coffee flavor still left.

    At the end of the day I still frequent Starbucks because it is convenient and the quality although not the top of the line is still O.k..

    Lastly the key to great coffee is certainly NOT in the machine. Its #1 the bean, #2 the water #3. the grind setting -and the sooner it was ground the better. If you are depending on a machine to make the difference ---then you need to go back to class. Try coffee tasting classes.

  • Report this Comment On February 07, 2011, at 10:57 PM, crca99 wrote:

    Ah yes, black, no sugar, freshly brewed is heavenly coffee. I never buy it from Starbucks.

  • Report this Comment On February 08, 2011, at 12:54 AM, dgmennie wrote:

    Now, if there were as many good ideas about investing on these blog pages as there are about brewing coffee, we might really have something.

    But alas!

  • Report this Comment On February 09, 2011, at 11:12 AM, lovepork wrote:

    If you actually like the taste of coffee, Peets is the only way to go. coffee gets poured out down the drain after 30 min. for real, ive seen them do it. they are instructed to do so even if it means making people wait. most wait without hesitation for a fresh batch of the best coffee in the world!

  • Report this Comment On February 16, 2011, at 9:57 PM, thidmark wrote:

    It's a free country, but I don't think I would ever admit to anybody that something "tastes like ass."

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