At their 2015 shareholders meeting, the nice people over at Starbucks announced some pretty staggering statistics. Things like they’ve got 22,000 stores across 66 countries. They’re completing 7,000 transactions every minute—3.6 billion over the course of 2014. The company’s market cap is soaring at $70 billion. These are impressive numbers for any company, but if you went back 40 years and told anyone that the little coffee roasting wholesaler in Seattle’s Pike Place Market would be a $70 billion company, they’d laugh and laugh and then laugh some more. With those humble beginnings, it’s no wonder they’re so strongly associated with coffee. These days, their menu is huge, but the brand is pretty much synonymous with coffee. So, here’s the thing: with all that success as a purveyor of coffee, you’d think people love their coffee, right? Well….not so much. At the same shareholder’s meeting, Starbucks’ Senior Vice President of Global Strategy, Beto Guajardo, gave a list of the top three reasons customers cited as to why they choose Starbucks. Coffee? Third place. OK, bronze medal, not so bad. That is until you see that third place meant only 26% of those responding. Think about that: three out of every four customers are heading to a Starbucks coffee shop for reasons other than coffee. Interestingly, the number one reason doesn’t have to do with anything they serve. Rather, it’s the people who serve it. “47% love the Starbucks brand because of the connection between partners and customers” (partners is how Starbucks refers to its employees). So, basically, for nearly half their customers, the choice boils down to a matter of experience.
Those first few statistics, taken on their own, might be cause for alarm for the owners of small, independent coffee shops and cafes. I mean, let’s be real: those are world domination-type numbers. But that last bit kind of levels the playing field, which is not meant to suggest that you and your 25 seat outpost are going to take down Starbucks one smile at a time. But if it’s an experience people are looking for—a place where they feel welcome and at home, where they connect with the folks behind the counter and can just order “the usual”—then surely the one-location mom-and-pop cafe has the upper hand on that. No matter the location, Starbucks has to rely on a central formula for running their shops—uniformity is the only way to keep control over such a massive operation. But the small shop can go in a completely different direction. In a battle of the hip space with jazz music and macchiatos, Starbucks wins every time. So don’t meet them on that battlefield. Draw up a new battlefield, one on which they can’t compete. We’re already seeing this happen with some really unconventional cafes popping up all over the place. Some places that have looked at the traditional cafe model and taken a pass are:
- The Cat Cafe in Melbourne. There’s a limited variety of hot and cold drinks, and light snacks here, because the emphasis with this place is on the cats. 14 rescued cats live in the cafe, and for $10/hr you can sit and chill with some felines. That might mean just reading a book with one all snuggled up in your lap, or sitting for awhile in the cat area enjoying a cup of coffee and Instagramming cat videos. There’s also a Bunny Cafe opening soon in Melbourne, which has bunnies (natch) instead of cats. The bunnies here will be fosters only, meaning patrons will have the chance to adopt them.
- The Cereal Killer Cafe in London.
Twin hipsters Gary and Allen Keery opened their first Cereal Killer Cafe in London a little over a year ago, and I’m not gonna lie: I want to go here. Customers choose from over a 100 varieties of cereal, and then pick from all manner of milk products and toppings to complete the perfect bowl. Each cafe is loaded with nostalgia from the 80’s and 90’s, beckoning you back to your childhood for nearly $10 a bowl. Sound crazy? They just opened their second location.
- Dein Waschsalon in Munchen. I don’t speak German, so I can’t tell you all the details. But watching this video on Youtube tells me everything I need to know. There are washers, dryers, ironing equipment, regular and specialty coffee, and sandwiches served on something that looks like a bagel/croissant hybrid. They appear to host events, where people gather and smile and cheer, and yet the dour German voiceover actor in the video still sounds like a guy who’s preoccupied with Heidegger’s theories on Being.
Now, you don’t have to go full kitty to differentiate yourself, but it helps to have some kind of niche. We see this with our clients, who are more often going with the do-one-thing-do-it-well philosophy.
Over at NoDo, they’re baking up gluten-free donuts, operating with the motto “Eat Donuts for Breakfast.” Beyond gluten-free, they’re committed to using healthful ingredients, carefully sourced, for their donuts—which are baked fresh everyday. And our friends over at Artificer appeal to that 26% of Starbucks’ customers that actually go for the coffee. They do that by making a far superior cup, “focusing on the correlation between roasting and brewing that best represents [coffee’s] unique qualities.” This is a place to really geek out on coffee.
Some people are talking about places like these, as if they’re heralding the dawn of a new age in which the traditional cafe becomes instinct. But we all know that’s not going to happen. Starbucks has no plans to scale back any time soon, and as long as there are French people in the world a quality small cafe will always find an audience. But these new breeds of cafe are showing that you don’t have to appeal to everyone, trying to be all things to all customers. A narrow focus or a unique niche can often be all you need to get started. If it’s a place where people feel welcome and look forward to visiting—which should be every small cafe’s area of expertise—you’ll probably stick around for a long while.