Starbucks "do as the Romans do"

Bi Weiyin

Paris-on a sunny morning in the elegant and stylish Marais district, Marion Bayod sits behind a small table in Le Cactus, a street coffee shop she has patronized for years. She glanced at Weibo opposite. "I never go to Starbucks, where there is nothing special, coffee is mediocre and expensive," said Bayod, a 35-year-old masseuse, as the waiter greeted her and quickly served her usual espresso. "for us, it's another world."

Nearly a decade after venturing into Europe, Starbucks is still trying to win customers. Despite a turnaround in the US, the novelty of Asian customers has not gone away and sales are growing steadily, Starbucks is still struggling in the European continent where coffee and cafe culture was born.

Now, Starbucks is launching a multimillion-dollar campaign to win over more European coffee lovers-not only luxuriously decorating hundreds of stores to cater to the deep-rooted coffee culture, but also adjusting drinks and blends to suit tastes in different regions.

The French are perhaps the hardest to deal with. Walking down the boulevard of Paris with a coffee cup? It's not popular here.

It took eight years to build 63 stores in France, but Starbucks never turned a profit. Even if it is profitable elsewhere in Europe, sales and profit growth lags far behind that of the US and Asia. Europe's debt crisis and recession are one of the reasons. At the same time, high rents and labor costs also have a higher impact on profits than in other regions. But the biggest challenge is to adapt to the ever-changing tastes of Europeans. "Europe is critical to our future," said Troy Alstead, the company's chief financial officer. "We haven't shown our best and we can be more influential."

To be sure, Starbucks has many fans in Europe, such as Amsterdam, Berlin, London and even some Parisians. Starbucks stores are full of citizens, tourists and young people using laptops, who see the coffee chain as the embodiment of American pop culture.

"stars like Kim Kardashian can be seen walking around with Starbucks coffee in many magazines." Daphka Monteiro, a 19-year-old Parisian and aspiring fashion designer, licked 5 euros ($6.50) of milk on a 5-euro ($6.50) cappuccino across from Bayod's favorite coffee shop. "I went to Starbucks with my friends because of fashion."

Maybe so. But it's hard for Starbucks to make money from people like her.

New Yorkers may be able to leave with a cup of coffee, which is the most profitable part of the company. The French prefer to sit down and drink slowly. As a result, Starbucks France has had to buy more seats and other facilities.

Michelle Gass, who became executive director of Starbucks in Europe, Middle East and Africa last fall, recently went on a people's trip to try to better understand the diverse needs of European customers. "in areas with a deep coffee culture like Paris and Vienna, I think more people will ask us to adapt to their culture," she said. But on the contrary, people want to feel the real Starbucks. "

Europeans in different regions also have different feelings about Starbucks, and the company has spent a long time studying these differences. The British, for example, love takeout coffee, so Starbucks plans to open hundreds of car shuttle stores in the UK. British people like to drink lattes, but many people think Starbucks lattes are not strong enough. Recently, British baristas will add a free espresso to it.

On the other side of the English Channel, however, 60% of French prefer espresso, while only 20% prefer American coffee. Many people feel that Starbucks espresso is too scorched, even by French coffee standards. So just two weeks ago, Starbucks introduced lighter-flavored concentrated roasted coffee beans.

Let's take a look at the problem of service. In order to give the chain a humane reputation, Starbucks required all its baristas in Europe to wear famous brands in early April. In London, baristas write down the names of customers when they order, and participants are given a cup of free coffee, although some complain on Twitter that this is fake American politeness. Baristas have also improved their procedures and now put milk within reach next to the coffee pot in order to overcome the curse of procrastination in Europe.

The most eye-catching improvement is the "concept store", which means to make Starbucks more like a fashionable street store. Last month in Amsterdam, an avant-garde store made of local wood opened. Howard Schultz, CEO of the company, cut the ribbon in person and presented a poem on the spot.

In Paris, the company recently renovated Starbucks near the Paris Opera House in a rustic style. A store next to the Louvre has been modernised with a sleek wooden coffee table. Starbucks on the high-priced Capsin Avenue uses an ornate hall with velvet chairs, chandeliers and angels flying in the blue sky on the Phnom Penh ceiling.

Starbucks can refer to the historical experience of two other American food chains. After 1997, Burger King was forced to close 39 stores in France due to the direct adoption of the American model and no localization adjustment. Conversely, in the past few years, McDonald's (Weibo) has grown rapidly in France and Europe, making some necessary fine-tuning, such as using French cheese, mustard and raw meat, preserving local architectural elements in its flagship stores and recently opening coffee areas in some stores for customers to use.

It is unclear how much impact Starbucks's new move will have on its European financial performance.

The company's global sales were $3.4 billion last quarter, and its share price soared to $53 from $8 in 2008. But Europe's sluggish economy has been hampering its sales growth. In the quarter to December, Europe's Starbucks sales grew by only 2% for the 13th month in a row. This is well below the 9 per cent growth in the Americas and 20 per cent in Asia. High rents and higher employee wages and benefits depress Starbucks' profit margins.

But managers are still confident in their new strategy. In addition to the existing 1700 stores, the company plans to open hundreds of new stores in Europe, and Starbucks plans to open a number of new stores at airports and train stations in Europe to capture passive customers.

Some analysts see risks in overexpansion. The global financial crisis of 2008 Mel 2009 forced Schultz to close more than 900 stores around the world, cutting costs by 580 million. The situation is different this time. In Europe, "closing stores or abandoning some markets may be more profitable," said John Ivankoe, an equity research analyst at JPMorgan Chase in New York.

GASS denied this. "We are not worried about the saturation of the European market, but the opposite is true. It sounds like we have a lot of branches. But when you walk the streets of Paris, compared with Manhattan, you have to look for them. It's not that you can turn around and see a Starbucks. "

(responsible Editor: Leo)