Starbucks: The crisis of a coffee giant

From the bustling streets of New York City to the tranquil neighbourhoods of Tokyo, Starbucks stores are almost everywhere. Starbucks has been one of the world's biggest success stories.? It started with 11 stores in Seattle in 1987 and went on to transform into a global phenomenon with more than 38,000 stores in over 86 countries, branding an entire industry with its concept and shaping trends. But perhaps, it lost it somewhere along the way.

THE GLOBALISATION OF COFFEE AND STARBUCKS' IDENTITY CRISIS

Globalisation, embodied by Starbucks' extensive influence worldwide, creating the culture of premium to-go coffee, has undoubtedly transformed coffee cultures around the world for good. On the one hand, it has opened up new avenues for businesses to expand their operations. However, one of the major concerns associated with Starbucks' global presence is the potential homogenization of different coffee cultures.

For many years the company had a great growth but from 2008 onwards various problems started to occur. The company expanded very quickly around the world and in the process eventually lost some of the "secret recipe" that made it so popular. Customers became frustrated with how it had become such a "mass" chain and turned elsewhere in large numbers.

In the wake of Starbucks' recent poor financial results, which included a 4% drop from the previous year, the Harvard Business Review published an article in which it stated unequivocally its belief that the coffee chain has "undervalued its own brand." Indeed, the article argues that the chain has moved away from the customer experience and has turned in a new direction, commoditising itself through reliance on discounts and other price-oriented strategies, as many similar businesses have done in adapting to inflationary pressures and the decline in the purchasing power of the public.

THE HIGH PRICES AND EFFORTS TO MAKE THEM MORE AFFORDABLE

Starbucks' rapid growth forced the company to raise its prices, which gave its competitors a cost advantage in terms of cost to the customer. However, if the brand does not refresh itself, gaining the lost audience while maintaining balance and identity, it is even more at risk.

THE FALL IN SHAREHOLDER VALUE AND THE WORKERS' RIGHTS

A further serious reason for this decline is the company's inability to maintain the good working climate it has had for so many years and the ongoing tension between the company and its employees regarding their unionisation, and the general debate about the company's attitude towards workers' rights.

As of 2021, nearly 400 Starbucks stores in the U.S. have expressed interest in joining unions, according to the U.S. National Labor Relations Board. To address these problems, Starbucks has planned to expand globally and raise wages for its employees. However, its decision to provide additional benefits to non-union employees has not only caused legal scrutiny but has further fueled the debate about the company's attitude towards workers' rights and unionization.

THE GREEK PROJECT

Starbucks came to Greece in 2002 with its first store in Korai Street, in the centre of Athens, while Greece was one of the first countries where the company had a presence in Europe, as it wanted to position itself and have a strong presence at the 2004 Olympic Games. During this journey, Marinopoulos Coffee, which manages the brand, went through a good Starbucks era in Greece where it expanded its network outside the country and into Cyprus, the Balkans, Switzerland and Austria. By 2008 Starbucks had reached 70 locations and the international growth promised by Marinopoulos to the parent company had been achieved with stores opened in Cyprus, Romania and Bulgaria.

But quickly, the big growth in Greece also led to store closures and now the network in Greece has been reduced to less than 30 stores with short-term liabilities exceeding 37 million as reflected in the latest published financial results for 2021.

Meanwhile, the Marinopoulos family company is reportedly last in talks with Starbucks for a multi-year renewal of its franchise agreement, which has long expired but has been renewed with shorter-term contracts. At the same time, it is trying to implement a restructuring plan with regard to debt obligations of more than EUR 26 million.

THE HIGH PRICES AND THE AMERICAN MODEL THAT DID NOT SUIT ΙΝ GREECE

From the very beginning of their arrival in Greece, Starbucks has displayed remarkably high prices compared to competing stores and offered a very specific concept clearly built on American culture. For a while, it won over mainly the younger age groups through its special, sweet drinks, but this was not enough, as no efforts were made to adapt the brand to Greek standards. At the same time, as in the world, came the great competition, which made customers turn to more economical and at the same time quality options. In the first period, competition at an organized level was only for Flocafe, but later other large chains such as Grigoris developed in Greece.

In 2024, and in the midst of the climate of consumer plagued affordability, prices are still extremely high and the brand no longer has the same value as in the past. The company in Greece is now a very small size and without being able to claim more than a very limited audience.

Both globally and domestically, Starbucks has admittedly now lost its glamour and is struggling, with significantly fewer stores, an identity crisis and under the shadow of reactions to its working conditions, to maintain its once strong brand name.