Starbucks - Delivering Customer Service

After evaluating each alternative (Exhibit 2), we recommend that Starbucks invest $40 million per year to increase labor hours per store in order to solve the problem with the quality of service. Starbucks should also set up an internal strategic marketing team. This will allow Starbucks to have a proactive feedback of customer satisfaction and hence faster improvement. We also noticed that labor cost is high for Starbucks’ North American operations. To keep labor cost at reasonable level, Starbucks should reduce waste in making drinks, keep consistency in drinks, and improving productivity. We recommend the company invest more money in automated espresso machines. Currently, sales of coffee beverages account for 77% of total sales, and therefore, we recommend Starbucks increase its sales on food items and whole-bean coffees, and develop non-retail sale channels, which do not require as much special training as making coffee beverages. We also suggest Starbucks capture the new customer base to be its second permanent loyal segment.

Rationale