The Problem with Starbucks

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Starbucks' stock (SBUX) is collapsing, and I think I know why. People are drinking less Starbucks.

Gregory at Starbucks in Farmers Market

Me at the Starbucks restaurant in Farmers Market, taken while studying at the Lee Strasberg Institute in 2004.

I drank Starbucks coffee for many years, especially during my years of burnout depression from 2000 to 2003 when I spent just about every morning in the Telford Gardens Starbucks café drinking coffee and reading the 東方日報 or 蘋果日報 newspapers. Before Starbucks came on to the Hong Kong scene, it was almost impossible to sit down, relax and have a decent cup of coffee in a café. Rents were too high, and coffee was not a common beverage (we're not talking about Cantonese-style coffee sold in the Chinese cafés here), so coffee cafés were not a viable business. The only choices for coffee lovers were the expensive high society Cova cafés or the Japanese styled high-turnover Pokka restaurants; not a great choice.

Starbucks changed that. They provided us with cafés where we could enjoy a decent cup of coffee for a reasonable price in a relatively quiet and relaxing place where we wouldn't be pressured to finish our coffee and leave as soon as possible to make room for the next customer, and Starbucks made coffee popular. In a self propagating development, Starbucks made coffee cafés viable.

Starbucks' success paved the way for other cafés. Here in Hong Kong, we now have several coffee café chains to choose from including Pacific Coffee, LGB, Habitū and UCC, and for that, coffee drinkers are grateful, but Starbucks now has a dilemma on its hands. While new café chains were popping up around it, Starbucks didn't make any changes to meet the competition. We drank coffee at Starbucks because it was decent coffee at a decent price, a quality and price that were not offered at other cafés. That's no longer true.

Reasons to drink at other cafés:

LGB's Tart and Macaroons

LGB's tarts are excellent companions to their coffee and mochas. The macaroons are however a little too expensive for my tastes.

LGB
The cappuccinos are great at similar prices to Starbucks. Their chocolate-based drinks including mochas use delicious France-imported cocoa-based chocolate syrups (with both light and dark selections) and are out of this world while Starbucks continues to use taste-insulting concentrated sugar syrups. LGB's tarts and French food are also very tasty.

Habitū
Again, the cappuccinos are far better than Starbucks' cappuccinos at similar prices. The food is also superior to Starbucks' food though not quite as good as the food at LGB.

Cova
The coffee is great although slightly more expensive than Starbucks' coffee, but Cova has a unique advantage. Their range of baked-in-house French-styled cakes and biscuits are absolutely delectable. It is a rare moment when you do not see people lined up outside their restaurants waiting for their turn to attack the cake buffet.

Cova's cake selection

Queues are a regular occurrence at Cova restaurants all over Hong Kong because of their cake selection.

Some of the problems that Starbucks needs to examine:

They don't have good black or straight coffee!!! Typically, a Starbucks long black coffee is made by pouring one or two shots into a cup and filling the cup with hot water; yuk! In Australia, Starbucks has a better method of making long black coffees but Starbucks Hong Kong dissuades their barristers from using this method; essentially involving 23-second shots; because it requires more time to make.

Smelly! When I visited the Starbucks stores in L.A. in 2006, I was intrigued that the stores were so smelly, damp, dingy and generally very low grade. How can American people put up with that? Also a major problem in L.A. was the speed of the employees and their demeanor. While the barristers in Hong Kong's Starbucks stores are usually cheerful and quick (although over-worked and under a lot of pressure from management), the barristers in L.A. were rather sad and as slow as cattle meandering through a field of oats. Almost every morning and night in the Sherman Oaks Starbucks store, people had to wait in line for twenty to thirty minutes to get their coffee. That's absolutely unacceptable, especially if the product is mediocre.

Howard Schultz has returned to Starbucks to help turn it around. It'll be interesting to see what he does, but I'd start with a few simple things.

Find out why other restaurants are making better coffee and improve Starbucks coffee. Use better ingredients. Use less sugar and corn syrup in the syrups.

Improve the café environment. The cafés should be relaxed, comfortable and clean. No strange smells. No dampness.

Close a few cafés (in the U.S.A.) There are too many too close together. If you want to make the coffee more readily available, open Starbucks counters (such as the Starbucks MTR Kwun Tong counter here in Hong Kong) rather than full scale cafés. A majority of Starbucks customers buy take away so too many cafés are a waste of space and rent.

I've basically stopped going to Starbucks. Given the choice, I'll get my coffee at LGB or Habitū. Or I'll just make my own ;-)

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29 Responses to “The Problem with Starbucks”
  1. Janice says:

    Interesting. I haven't been to HK since last summer. But I am seriously missing a good cup of latte or cappuccino. I just simply don't understand why I couldn't find good espresso-based coffee in Europe (Ireland and Scotland is pretty close though.) while they are just about at every corner in Melbourne, well, except the Starbucks in Melbourne. (And nope, still haven't been to Italy, but have heard that it was only mediocre from other travellers.)

    I would give your recommendations a try however, I remember clearly that LGB macarons were so expensive that they have hit the unaccetapble standard of mine. But if you say their coffee is of a comparable price to Starbucks, I will give that a try. (Just on the record, I think Starbucks is actually over-priced for that quality.) And Habitu looks alluring for me :) But what I really want is actually a small local cafe that serves good coffee.

  2. Audrey Yip says:

    Dear Greg,

    We would like to invite you to a sharing session with 80 university students on 'Working and Living in HK' on 23/7 evening. Please email me for further details if you are interested.

    Thank you very much.

    Audrey
    HKU

  3. yinyin says:

    hehe~~~ i love drinkin coffee too, but i personally prefer mocha or latte, talking abt starbuck, i hardly drink it because i always wanted to drink coffee from Aussie coffee shop like Gloria Jeans, haha prejudice. But just wanna to support n help the domestic industries... hahah werid me.. but some of the pictures ur post with all those delicious and attractive lookin cake are really temptating.... so wanna to try~

  4. Relax says:

    I think Jackie Chan Cafe is quite nice. I don't think it is there in HK

  5. Jo says:

    I prefer Gloria Jeans too, but not because I need to support domestic businesses - their coffee is simply better. The ambience is also better, whilst the prices are similar. It's been a long long time since I've been to Starbucks.

    I actually find myself going to small independent cafe's more often than not. They're usually much cozier and warmer, but can cost a little more.

    I've never seen those other cafe's around in HK; or Starbucks for that matter, I think I'm usually too busy with Hui Lau Shan's numerous drink/desserts. I'll make note to try LGB the next time I'm back though, it sounds quite good.

  6. Mark says:

    Somebody once told me that Starbucks in HK is franchisely operated by Maxims and the beans they use are similar, if not the same!

    I prefer Pacific Coffee because they provide PCs for surfing the internet. Starbucks doesn't! The Pacific Coffee opposite Hopewell Centre in Wanchai is probably the coziest in town. Besides newspapers and mags, books are also provided.

  7. Christine says:

    It is no longer true that we are not pressured to leave early to make room for the next customers. Some Starbucks (e.g. APM's) are so crowded that you are required to share a table with 2 other different groups (1-3 persons each). Some people even wait next to your table like we did at the dim sum restaurants in the old days!

  8. shaw says:

    Glad you are blogging again, Greg!

    Starbucks is watching less "bucks" flowing in. A coffee-drinker myself, I am not a fans of Starbucks since the beginning of their business. The reason is simple: for the same amount of dollars, I can get better taste coffee and ambient.

  9. Christijana says:

    since I moved back to HK from Perth, Western Australia, last year, I missed Miss Maud so much. The coffee from local tea house just couldn't satisfy my "coffee bud" until I found Pacific Coffee or Starbucks or some other westernized cafe...a cup of coffee and a piece of danish pastry will surely made my day.

  10. Grace Yuen says:

    I suggest you to visit Mackie Kitchen in Causeway Bay.
    Their coffee is up to standard, some of them are better
    than those in Starbucks. Have a try!!

    http://www.mackiekitchen.com/

  11. kyuri says:

    wow so interesting that i found this article! so just wondering what is the different method to make black coffee in australia starbucks? i worked at hk starbucks before but now i'm in australia and want to work as barista again but i didn't think there'll be differences in coffee making.

    you're totally right about the over-working and the crappy syrups though! worse is irish cream i swear anyone that orders it totally doesn't know what they're ordering ... ^^;;

  12. 河國榮 says:

    hello kyuri.

    in Australia (according to a couple of the Starbucks barristers I'm familiar with here in Hong Kong), they pour "long" blacks by allowing more water to pass through each shot; approx 28 to 31 seconds as apposed to the standard 23-second shot. in Hong Kong unless specifically requested, they pour standard shots into the cup and then fill it with hot water from the water heater, the same water they use for Americanos. there is a significant difference in the taste of the coffee. long-shot black coffees are way better!

  13. GERTIE says:

    I had the same with SB in San Franscisco. dirty, smelly and too many in one street, and the staff were slow and uncaring...surprised they are still going with the high expectations from the Americans in regards to service and quality. Or is SB after a different market now...just the tourists to the USA???

  14. 隐藏人物 says:

    http://bbs.geekaa.com/go/starbucks

    这是一个geekaa bbs里面专门讨论starbucks的一个讨论区。

    我可以将你的这篇blog转载到那里吗?我会注明文章的出处地址及作者。

    在大陆,很多朋友像我那样喜欢看你的表演,大家一定很高兴见到你的blog。

  15. 河國榮 says:

    是。你可以。;-)

  16. ec says:

    Starbucks is not good enough and had difficulties at the beginning entering the market in Sydney where the coffee culture is very mature (thanks to the local Italian community). Starbucks now is still not really popular among locals. Many local cafes make better coffee than theirs, and better than Gloria Jeans'.

  17. Joel says:

    Here in New Zealand I believe you can go to any independent (or even smaller chains like The Coffee Club) cafes in big cities and have expresso-type coffees that win hands down over Starbucks, at the same cost. It is a little too watered down in flavour, and I dare say the beans are not chosen and stored carefully enough so they become too humid before grinded.

    As an aside, I find expresso-type coffees to be too expensive in Hong Kong. A cup of latte is only NZ$4 (~= HK$24) even in 4-starred hotels in Auckland, and yet YMCA in Hong Kong would charge you for HK$32 for a cup when I was back in HK to visit family last year.

  18. 杜格拉斯 says:

    The Starbucks counter in Kwun Tong MTR station is not a very successful one, and I don't think a counter is a good idea. Starbucks is not only selling coffee, but also selling you the drinking environment, a place to relax yourself. If you are too rush for a coffee, you better go for a cheaper choice.

    And one thing I don't like Startbucks is, there is no Wifi available in Hong Kong Starbucks. In china, you can easily find a Starbucks with Wifi. Damn Starbucks!

  19. Amy says:

    Hmm... I tried Starbucks in Hong Kong only. But I never liked it ^^"
    During 2002-2004, McCafe was my choice. Those were the good old days that McCafe was relaxing and Quiet. Back then, there were only a few McCafe stores in HK and they even have speciality coffee of the day (made with great coffee beans) on offer. Now, they only have cappuccino, "milk coffee"... yuk~ They taste like a mixture of water and milk to me, haha...but still better than those SWEET coffee in Starbucks :-P Oh, I miss the super black coffee and the aromatic columbia special *o*

  20. Amy says:

    going to try LGB and Habitū :-D

  21. Jing says:

    Last night I just got know your blog from searching some information about deaf BARISTA via internet. I have been hunting for barista job in Brisbane for nearly a month and there's no result due to my deafness. NOW your blog bring happiness to me...though I have never heard of you before.I am very surprised that you can speak fluent Cantonese. I am from China and live in Brisbane now, can speak Mandarin and English,now I am trying to learn Cantonese so that someday I can speak it in HK without any help!^_^ As I started learning speaking when I was going to be 7,and thanks to my family's great help, my Mandarin is better than English, which I can talk with any people as I wish. Now I am very interested in COFFEE and have got practised making coffee in coffee school. I hope I can be one of great baristas there someday.:P

  22. DSvT says:

    Emm, Thank for the sharing~
    Yes, is true that Starbucks coffee service is differ from country to country, in Malaysia (my country), Starbucks coffee seem to be not so good taste as the Japan Starbucks, I still remember my time in Japan last year, I always buy a cup of Tall Cappuccinos, and enjoys it while in the Train and at the train station. Feeling like nobody business while I having my coffee, and everyone surrounding me were so busy rushing to work~

  23. starbucks barista says:

    hi greg, i was actually an ex-australian starbucks barista and i can tell you that this is the same way of how starbucks australia made their long black/americano. i think you were probably talking about drip coffee? anyways, nice blog, i am a fan - keep it up!

  24. Alfred says:

    Hello Greg, very nice article. Do you have any tips on acquiring coffee beans in Hong Kong? Don't know if LGB or Habitu have them selling...

  25. 河國榮 says:

    hello Alfred.

    I don't think LGB or Habitu have beans for sale. My last bag of beans came from the Segafredo cafe in Central; a smoky coffee and quite nice although it would have been nicer if I had have owned a better grinder.

    My next bag of beans was given to me by visiting friends from Australia. The beans are LavAzza :-)

    There is a very old shop in the mid-levels that sells hand-roasted Egyptian coffee beans. They're not expensive and probably worth a try. The shop in on the road that goes from Hollywood Road up past the old prison.

    cheers,
    Ho Kwok Wing

  26. Stephen Lew says:

    LavAzza is good. I usually buy the grind ones that are vacuumed sealed. When I open it, the bag sucks in air. However, I place them immediately in a jar that I tightened as best I can. In regards SB, it will be my only choice comparatively here in Canada as the alternate choice would be the (according to my standards) infamous Tim Horton aka (to me) dirty water. I've always thought that Star Bucks' standard is the same everywhere. That's till I went to a local one near my work. The barista that took my order told me he's relocating to another location and he told me that the customers at the location he's going to are much more demanding. Thus the baristas are much more experienced in preparing the drinks. Thus the impression of the different standards. After reading your post and the different comments here, I concur that it's not the same everywhere. Having said that, I still make Star Bucks my first choice. However, I'm very reluctant in trying new coffee locally other than brewing my own at home or travelling outside of North America. I've always thought that Europe has good coffee shops. Even Mickey D's (aka McDonald's) in Europe sells coffee even better if not comparatively to Star Buck's. Still need to prove that. Anyone could do so?

  27. 河國榮 says:

    hi Stephen.

    my Sydney friends who gave me the Breville Cappuccino machine usually bring me one or two packets of coffee beans whenever they visit Hong Kong (cool friends!). this time around, they gave me a large packet of LavAzza, and I have to agree that it's nice coffee.

    another friend from Vancouver just brought me three packets of coffee beans from 49th Parallel Coffee; very nice coffee!!

    and my sister mailed me a variety of coffee beans from Bundaberg in Australia for xmas.

    needless to say, I won't be in need of coffee beans for a while :-)

    "Tim Horton" -- I tried their donuts. compared to the homemade donuts my mother makes, and compared to the fresh hot donuts we used to get at the local bakery in Katoomba Australia many years ago, their donuts are very so-so. I wouldn't expect their coffee to be very good either.

    if you're in Vancouver, I think you should try the Caffee Artigiano cafes. I wasn't able to find one while I was there, but I suspect that their coffee is better than SB's.

    cheers.

  28. shan says:

    Hi there,
    I'm from Malaysia and just started to follow you on your blog and it was great reading it :-) didn't know that you have left TVB until recently I realized you were not in any of the dramas I watched. Well, I wasn't really paying much attention on the entertainment news. But I really love seeing you in the scenes.

    I have to agree with what you wrote in this article. Starbucks never quite improve with relatively higher price compared to other competitors while we can get same or better things in other places with lower price. I used to be a barista in Starbucks, that's why I know. Really hope that thing will improve, otherwise, I will feel sad for people who spend in Starbucks.. Haha~

    Really enjoy reading your blog. Have a great day!

  29. Bethany Cousins says:

    Thanks for this blog post! I was writing a marketing paper about Starbucks and its competition - believe it or not, you talked about the competition better than any other resource available on the Internet! Thank you for the comparison!