Starbucks BLM&P Research BLMP Research

BLM&P Research

• Lourdes Becerra • Brian Litke • Kari McLean • Rebecca Prindable BLM&P Research Decline in Sales BLM&P Research Second Quarter 2009 Fiscal Highlights Apr. 29, 2009-- Starbucks Corporation (NASDAQ: SBUX) today reported financial results for its second quarter ended March 29, 2009.

Net revenues of $2.3 billion, a decrease of 7.6 percent

• Comparable store sales of negative eight percent; compared to negative nine percent in Q1 2009

• Cost reduction of approximately $120 million versus target of $100 million

• EPS of $0.03; Non-GAAP EPS (excluding restructuring) of $0.16

BLM&P Research Starbucks Problem

• Decrease in:

• profit margin • drop in sales

BLM&P Research

Historical Financials & Employees

Income Statement

Year Revenue Net Income Net Profit Employees ($ mil.) ($ mil.) Margin Sep 2008 10,383.0 315.5 3.0% 176,000

Sep 2007 9,411.5 672.6 7.1% 172,000

Sep 2006 7,786.9 581.5 7.5% 145,800

Sep 2005 6,369.3 494.5 7.8% 115,000

Sep 2004 5,294.2 391.8 7.4% 96,700

Sep 2003 4,075.5 268.3 6.6% 74,000

Sep 2002 3,288.9 215.1 6.5% 62,000

Sep 2001 2,649.0 181.2 6.8% 54,000 BLM&P Research Decline in Sales BLM&P Research Decline in Sales BLM&P Research Coffee Market Overview

• 54% of US adult population are coffee consumers1 • Americans drink more than 488 million cups of coffee a year2 • US coffee drinkers spend on average $164.71 per year on coffee3 • Average coffee consumption in the United States is 3.1 cups of coffee per day (NCA). Per capita, men drink approximately 1.9 cups per day; women drink an average of 1.4 cups of coffee a day (NCA)4 BLM&P Research Coffee Market Overview

• 80% of coffee drinkers now make coffee at home with brand name coffee (not trading down to no-name brands)1 • McDonald’s McCafe beginning to dent Starbucks2 • 60% of Americans have scaled back on fancy/expensive coffee since June 20083 • 90% scale back to save money3

BLM&P Research Unemployment Rate BLM&P Research

US Population Estimate as of July 1, 2008

242,933,996 women and men Ages 15-100+ Median age (years) 36.8 BLM&P Research Earnings BLM&P Research

Starbucks Background

BLM&P Research Starbucks Data • Founded in 1971 in Seattle’s Pike Place Market

• Mission Statement: To establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles as we grow.

• Guiding Principles: • Contribute positively to our communities and our environment. • Recognize that profitability is essential to our future success.

• Starbucks Corporation's Common Stock is traded on NASDAQ, under the trading symbol SBUX. BLM&P Research Starbucks Stores

• 4,500 stores in 47 countries • North America • Europe • Middle East • Latin American • Pacific Rim • Stand-alone stores • Kiosks • Inside retail stores • Also own Seattle's Best Coffee and Torrefazione Italia coffee brands* BLM&P Research

Starbucks Consumer Data

• Starbucks drinkers 29.1% single • 27.2% professional/management jobs

BLM&P Research Starbucks Store Products

• More than 30 blends of coffee • Tea • Bottled beverages (protein shakes, water, juice) • Pastries, fruit, sandwiches, cheese plates • Merchandise: • Coffee • Tea • Music CDs • Mugs

BLM&P Research Starbucks Products in Grocery Stores • Coffee • Ice cream • Bottled frappucinos

BLM&P Research Starbucks Cards BLM&P Research Starbucks Cards

• According to official Starbucks fact sheet: Starbucks Card, a reloadable stored-value card, surpassed the $2.5 billion mark for total activations and reloads since its introduction in 2001. Due to its success in the U.S. and Canada, the Starbucks Card global program has been launched in other international markets, including Mexico, Hong Kong, Australia, Thailand, Greece and the United Kingdom. Other markets (Japan, Taiwan and Spain) have a stand-alone Starbucks Card program, specific to their market BLM&P Research Starbucks Cards BLM&P Research

Corporate Social Responsibility BLM&P Research Corporate Social Responsibility

• Hot cups use 10% recycled content

• New Vivanno cold cups use 15% less plastic and emit 45% fewer greenhouses gasses in production than industry-standard PET plastic and are recyclable

• Discount if you bring your own cup

• Chemical-free organic and fair trade coffees

• Starbucks(RED)

• Ethos water

BLM&P Research Corporate Social Responsibility

• Measures annual greenhouse gas emissions • Encourages suppliers to adopt more environmental practices • Purchases renewable energy (20% in US and Canada) • Adjusts thermostats to reduce electricity usage • Water-efficient fixtures • Energy-efficient lights • LEED certification for Seattle Support Center • Recognized by the EPA as the Green Power Partner of the Year in December 2006  Developed the online Planet Green Game to educate players about climate change and every-day behavior change. BLM&P Research Employee Benefits

• Part-time and full time employee’s qualify for comprehensive benefits packages that typically include stock options through “beanstock” • Also includes health, dental, vision and medical insurance for employees • “Partner markout” - each week employees are given one pound of coffee, one box of tea and other various other starbucks products free of charge

BLM&P Research 2009 Expansion Plans Starbucks expects to add approximately: • 20 net new stores to global store base • 320 net new licensed stores internationally • 60 international company-operated stores • 65 net new licensed stores in the U.S. • (Net reduction of approximately 425 U.S. company- operated stores)

BLM&P Research Third Place • Meeting Place • Business • Social • Study • Read • Music • Recorded • Live • WiFi BLM&P Research Social Media as of July 19th, 2009

• Official Starbucks page has 3,576,651 friends • On twitter the official Starbucks has 251,716 followers • Official itunes page to download CD’s, songs, playlists • www.marketingcharts.com ranked Starbucks as the 6th ranked social brand of 2008

BLM&P Research Major Competitors

Independent coffee shops Locally-owned small chains BLM&P Research

McDonalds BLM&P Research

Business Overview

• Operates hamburger restaurants • Leading global food service retailer • More than 31,000 local restaurants • In 118 Countries • Serves more than 58 million people each day • Engaged in the franchise business • Trade Symbol on Nasdaq MCD

BLM&P Research

Social Media

• Launched Station M • Private networking site for more than 650,000 hourly employees • Used to post comments, photos, and participate in contests • United States and Canada • Registered on Facebook, MySpace, and Twitter

BLM&P Research Social Media

• Facebook - 5,857,595 • Facebook - 4, 316 • Twitter – didn’t see one followers • MySpace – Big Mac • Twitter 870 followers Chant off (Contest • MySpace – Profiles with Winner) MySpace Job the name McCafè Search BLM&P Research Corporate Social Responsibility

• Nutrition and Well Being • High Quality Choices- develop menu offerings that provide a range of choices that meet needs and preferences and that fit in a balanced diet. • Consumer Friendly Nutrition Information- provide easier access to nutrition information • Communicate Responsibly- Continue to refine marketing and communication practices, particularly to children

BLM&P Research Corporate Social Responsibility

• Environmental Responsibility • Energy Efficiency- Find further ways to increase energy efficiency restaurants to save money and reduce environmental impact. • Sustainable Packaging and Waste Management- Continue exploring ways to reduce environmental impacts of consumer packaging and waste in restaurant operations. • Green Restaurant Design- Enhance current strict building standards to incorporate further opportunities for efficiency and innovation in the design and construction of restaurants. BLM&P Research Corporate Social Responsibility

• Employment Experience • Respect - Create a diverse and inclusive culture where everyone feels valued and respected. • Commitment Enhancement- Continue to enhance employment value proposition to drive high levels of employee commitment. • Talent Management- Attract, develop and retain the most talented people at all levels.

BLM&P Research

Community Involvement

• Ronald McDonald House & Children’s Programs • Partnerships and Sponsorships • Owner/Operation Involvement • Disaster Relief BLM&P Research Coffee Products

• House Coffee (free refills on black coffee) • Iced Coffee • Caramel • Hazelnut • Vanilla • Regular BLM&P Research Beverages

Espresso based coffees • Cappuccinos • Lattes • Mochas • Iced Lattes • Iced Mochas • Iced Premium Roast brewed coffee • Hot Chocolate BLM&P Research

McCafé Beverages

• 2006 McDonalds Introduced Premium Roast drip coffee • 2007 Introduced Iced Coffee and tested a full line of espresso-based specialty coffees in Select U.S. markets • 2009 McDonald’s launched McCafé Coffees • McCafé can be found in more than 10,000 locations • Tag line “McCafé Your Day!” BLM&P Research Third Place

• Wi-Fi is found in more than 30,000 McDonalds restaurants world-wide • Connect with payment • Credit Card • Subscriptions • Prepaid Cards • Promotional Coupons (sometimes)

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Locations

• Airports • Gas Stations • Malls • Stand alones

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Marketing

• $100 Million • TV • Print • Radio • Out Door • Internet • Events • PR • Free Samples BLM&P Research

In May 2009, McCafé espresso based coffees contributed to the increased sales of 2.8% for McDonald’s in the United States.

• MCD: Stock Quote • $ 57.84 0.62 1.08% July 17, 2009

BLM&P Research McDonalds vs. Starbucks

BLM&P Research Dunkin’ Donuts BLM&P Research DunkinBeatStarbucks.Com BLM&P Research Dunkin Donuts Data

• Founded in 1950 (Massachusetts) • Franchised by 1955 • End of 2008- Number of stores • 8,835 stores, with 6,395 franchised in the United States • 2,440 in 31 countries • End of 2008- Sales • Overall company global sales reached $5.5 billion • DD Specific Sales: $20.2 million • Chicago has 476 Dunkin’ Donuts • Dunkin’ Donuts is owned by Dunkin’ Brands, Inc. which is owned by a consortium of private equity companies: Bain Capital, The Carlyle Group, and Thomas H. Lee Partners. (Not publicly traded) BLM&P Research Dunkin Donuts

• Slated as the “World’s largest coffee and baked goods chain” • Serves more than 3 million customers a day • More than 52 varieties of donuts, and more than a dozen coffee varieties (plus bagels, baked goods, and breakfast sandwiches) • Slogan: America Runs on Dunkin’ • As of 2009- new $100 million Ad Campaign targeting “Hard-working Americans”: “You ‘Kin Do It!”

BLM&P Research “You Kin’ Do It!” BLM&P Research “You Kin’ Do It!”

• "Prevailing over life's daily challenges deserves acknowledgement and appreciation, especially in difficult times. 'You Kin' Do It' shines the spotlight on the accomplishments of hard-working Americans, while reinforcing that Dunkin' Donuts will continue to fuel their busy day and provide a bit of happiness without blowing the lid off their budget," she said

BLM&P Research

Dunkin Donuts

• "The price-value equation is starting to change," Passikoff says. "It's hard now to know what Starbucks stands for. That isn't a problem with Dunkin' Donuts.” (Forbes) • In 2007, Forbes ranked “hottest coffee chain” • Dunkin' Donuts has earned the No. 1 ranking for customer loyalty in the coffee category by Brand Keys for three years running. • Middle class demographic • Serves rural markets not feasible for Starbucks • Some stores open 24 hours • Drive-Through Window • Not strong on “Third Place”

BLM&P Research Coffee Products Sold

• Dunkaccino • Coolatta • Indulgent Iced Lattes • Hot Coffee • Iced Coffee • Latte Lite • Flavored Coffee • Turbo • Bulk Coffee BLM&P Research Other Beverage Products

• Iced Tea • Hot Tea • Chai • White and Regular Hot Chocolate • Smoothies • Non-Coffee Coolattas • Soft Drinks/Juices/Milk BLM&P Research Other Products

• Donuts (+35 varieties) • Bagels • Munchkins (+9 varieties) • Flatbread sandwiches • “Fancies” (+9 varieties) • Breakfast sandwiches • Stick Donuts (+6 varieties) • Croissants • Danish pastries • Muffins • Cookies • Some locations have • Brownies Baskin Robbins or • Cinnamon twists Dunkin’ Deli as well

BLM&P Research DD Employee Benefits

• Medical/Dental • Basic Life Insurance • STD/LTD • FSA • EAP • 401 K • Paid Vacation • Paid Holidays • Paid Sick Days (up to 8) • Paid Personal Days (2) • Paid Bereavement • Tuition Reimbursement • Group Auto and Homeowners Insurance BLM&P Research Working at DD

• In December, 2006, the Boston Business Journal reported that Dunkin' Brands ranked # 2 in the 4th Annual Massachusetts Corporate Reputation Survey. Dunkin’ Brands had the best finish for a consumer products company in the survey’s four year history. BLM&P Research

Corporate Social Responsibility • Social • Nutrition Advisory Board, DDSmart, Bright Choices, Dunkin’ Brands Disaster Relief Fund • Philanthropic • Volunteerism, powerful support for local communities, and non-profit partnerships BLM&P Research

Corporate Social Responsibility • Economic • Diversity and Inclusion- understanding and reflecting the diversity of DD guests in all aspects of the business • 100% Fair Trade Certified Coffee Beans • Support Community Development projects, such as: Sustainable Agriculture, Healthcare, Education, Women’s Leadership Training, and Infrastructure Improvement BLM&P Research Corporate Social Responsibility

• Energy Efficiency • Install sensory controls in bathrooms, offices, and storage closets • Replace Analog HVAC with programmable HVAC • Replace walk-in coolers and freezer motors with electronically commutated motors • Implement web-based energy mgmt system • Carbon Footprint- 2008 • To understand their environmental baseline • Identify Priorities • Set measureable goals for improvement BLM&P Research

• LEED partnership/certified store opened in 2008 in St. Petersburg, FL • Recycling: On-site Earthworm Casting facility, a collaboration between Dunkin' Donuts and local company Mother's Organics (www.mothersorganics.com). The solar powered tank houses 80 lbs. of small red earthworms that will eat the waste produced by the store, such as coffee grounds and paper products. The worms' waste will then be converted into fertilizer for local farms and gardens. • Reusable Mug Program: Customers are encouraged to bring their own mug, and will receive a discount toward the purchase of a beverage. • Paper Hot Cups: Hot drinks are served in paper cups made from renewable resources. • Food Donation: Leftover baked goods are donated to America's Second Harvest, a local food bank. • Green Cleaning: Cleaning products meet LEED requirements and California Air Resources Board (CARB) standards, better for the environment and customers.

BLM&P Research “Third Place”

• As of 2006, newly remodeled stores and new locations will have WiFi capabilities and an all day menu • Don’t want to alienate people who want to relax with their laptops • Fundamentally- DD is devoted to quick service at a lower price

BLM&P Research Social Media

• Facebook- 828,894 fans (as of 7/18/09)

• Twitter- 28,747 followers (as of 7/18/09) • Dunkin’ Dave Twitter page • Uses word “kin’” whenever possible • Youtube- 1,754 subscribers, with 317,008 views (as of 7/18/09) • DunkinBeatStarbucks.com • Website dedicated to challenging Starbucks BLM&P Research Promotions and Contests

• DD Perks and Fuel Rewards • At participating gas stations in specified states • For every $20 you spend with registered DD card, 5¢ off each gallon of gas • $2 Bonus Game Day • Specified games/stadiums • Coupon • Win free coffee for a year (These are all current) • DD rechargeable card BLM&P Research Dunkin’ Run

• A Way to order coffee on the go for you and your friends • Has its own website • Has received a lot of positive press regarding ease of large orders, and the free iPhone application • Are you the person who always offers to make a Dunkin run for the office? Are you the person intern who's always forced to make a Dunkin run for the office? (From Bostonist.com) • Want to live in the future, Dunkin’ Donuts Style? (with link to iTunes store from Unofficial Apple web blog) • How it works: • Go to the Dunkin’ Run website on your computer, mobile, or iPhone application—this makes you “the runner” • Then choose which friends you want involved, entering either their mobile numbers or their email addresses • Order, DD then contacts your friends and tells them to do the same • “The runner” (that’s you) goes and picks everything up—you have to either have the order on your mobile, or on a computer print out BLM&P Research Expansion Plans

• April 2009- 1st hotel restaurant location (North Carolina) • Plans to expand into airports, sports arenas, and other lodging facilities • US goal • 15, 000 + stores by 2016 • Taiwan • Plans 100 stores in next ten years • South Korea • Already has 191 stores, plans to open 100 more BLM&P Research DD Co-branding

• Partnership with Boston Red Sox/Fenway Park • Partnership with the New England Patriots- Northeastern roots • Official in-flight coffee for Jet Blue airlines (2006) • Partnership with Proctor & Gamble to sell DD coffee at retail outlets (2007) • Partnership with Hess Corporation and Sara Lee to sell DD at non-traditional food service locations (2007) • Partnership with Yahoo! To create new Dunkin’ Donuts- branded video programs and a community website (2008) • LEED certification for St. Petersburg, FL location (2008) BLM&P Research Starbucks vs. Dunkin Donuts

BLM&P Research Starbucks vs. Dunkin Donuts BLM&P Research Starbucks vs. Dunkin Donuts BLM&P Research Caribou Coffee

• Founded 1992

• Mission Statement: Our mission at Caribou Coffee is to provide a total experience that makes the day better.

• Tagline: Life is short. Stay awake for it.

• Trading Symbol: CBOU on NASDAQ

• Almost 500 company-owned locations, 6,000+ employees • Includes 52 franchises

• Locations in 16 US states and the District of Columbia, some stores overseas BLM&P Research

Commercial Sales

• Club stores and grocery stores • Mass merchandisers • Office coffee providers • Airlines and hotels • Sports and entertainment venues • College campuses • Other commercial customers • Catering

BLM&P Research Products Sold

22 types of coffee roasts • Desserts 10 light, 12 dark, 5 decaf • Sandwiches Classics • Salads Espresso • Fruit Lattes Hot Chocolate/Cocoa • Yogurt parfaits Cold • Muffins & breads Smoothies • Scones & cookies Coolers • Donuts & bagels Tea

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Other Products Sold

• 7 coffee gift sampler boxes • Coffee of the Month Club • Gift sets and Gift cards • 10 flavors of coffee syrup; 5 sugar free flavors • Travel mugs & tumblers • T-shirt • Bear-shaped stools and stuffed animal bear head • Accessories – canister, stuffed moose, photo frame, coffee bag, lunch tote, lip “stuff” • Equipment: home brewing systems, single cup coffee- making system, French press, grinders BLM&P Research

Corporate Social Responsibility

• Allocate funds to support socially responsible initiatives in coffee-producing communities.

• Focuses on charitable efforts in the areas of breast cancer, children’s literacy, and the environment

• Donations of coffee, coupon certificates for free drinks or free pounds of coffee, valid at Caribou Coffee retail locations

• A large portion of the coffees they source comes from Rainforest Alliance Certified producers

BLM&P Research

Corporate Social Responsibility

• Offer ceramic mugs and plates for in-store dining • Discount for bringing your own cup • Chemical-free organic and fair trade coffees • Napkins made of recycled materials • Amy's Blend benefiting Susan G. Komen for the Cure • Coffee Kids benefiting coffee-producing communities in Central American and Mexico • Grounds for Health, which provides cervical cancer screenings for women in Mexico and Guatemala BLM&P Research

Employee Benefits

Team Member Discounts - On beverages, food, beans, teas & merch

Pay & Benefits - Pay increases, promotions and great benefits

Flexible Schedules - A wide range of shifts available, no late-night hours

Caribou College – Advanced training classes after initial in-store training

Health & Dental Insurance - Team Members regularly working at least 20 hours per week are eligible to participate. Eligible dependents include same-sex domestic partners.

BLM&P Research Employee Benefits

401(K) - a discretionary match, currently 25% on the first 5% you contribute at the end of each year, subject to a four-year vesting schedule

Life Insurance - Caribou Coffee provides basic life insurance to all Team Members regularly working 32 hours per week. Team Members can purchase supplemental coverage for themselves and their dependents. Eligible dependents include same-sex domestic partners.

Pool Leave - Full time Team Members who consistently work a minimum of 32 hours per week are eligible. Hours are accrued from the first day of employment. Pooled leave eligibility will begin after a Team Member completes six continuous months of service. BLM&P Research

Third Place

• WiFi at 300+ Caribou Coffee stores nationwide • Meeting Rooms • Musicians play at some Caribou stores • Lodge feel with • Fake stone fireplaces • Wood and slate floors • Wood beams, Iron trim • Iron moose • Moose antler-shaped cut out product rack BLM&P Research

Social Media

• Facebook: 2,181 fans • 40+ additional fan group with 2,499 fans • Two anti-Caribou fan groups with 24 total fans • Twitter: 76,275 followers • Area-specific profiles with followers from 22 to 125 • Other larger Caribou profiles with 3,155 and 44,095 followers

• YouTube: 60 videos made about Caribou, only one official video by Caribou Coffee experts (only 2 views for this one)

BLM&P Research

Co-Branding

• Coca-Cola North America/Caribou Iced Coffee • Frontier Airlines • Mall of America • Kemps Ice Cream/Caribou Coffee Flavor

BLM&P Research Additional Information BLM&P Research

Caribou vs. Starbucks

http://seekingalpha.com/article/31290-is-it-time-for-starbucks-to-buy-caribou-coffee BLM&P Research Discovery

• Starbucks market share started declining before downturn in the economy

• McDonalds share of the coffee market is increasing

• Starbucks major competitors include independent shops and locally-owned chains, but each of these doesn’t hold a significant portion of market share.

BLM&P Research

Research Objectives

• How is Starbucks going to handle the downturn in the economy? • Why has Starbucks lost its appeal? • What can Starbucks do to regain its appeal? BLM&P Research Research Methodology

• Non-probability sampling (convenience sampling) • Mix of Starbucks and non-Starbucks consumers • Project length, depth and budget unable to support probability sampling • Research used • Quantitative • Qualitative BLM&P Research

Observational Research

Disguised Observation at one location of Starbucks and each major competitor BLM&P Research Starbucks Observational Research

• Men 31 • Female 22 • Cold Beverages 23 • Hot Beverages 30 • Food Purchased 16

July 5th, 2009 10:00am-11:00am Armitage and Hoyne BLM&P Research Observational Research

• Men 24 • Female 16 • Hot 35 • Cold 4 • With Food 29 • Special Drinks 4 BLM&P Research Observational Data • Men: 63 • Women: 51 • Food purchases as well: 81 • Bagels, muffins, donuts, breakfast sandwiches, other pastries, and ice cream • Cold Coffee/Tea Drinks: 39 • Hot Coffee/Tea Drinks: 75 • Brought personal mugs: 7 * I felt awkward sitting in the DD location for an hour + (also received weird looks) *Canal/Roosevelt location- also has a Baskin Robbins BLM&P Research

Caribou Observational Data

• # Women: 38 • # Men: 59 • Hot beverages: 54 • Cold beverages: 27 • Bottled beverages: 6 • Food: 20 • Large size: 30 • Medium size: 40 • Small size: 16 8:30am – 10:00am on Friday, July 3, 2009 3025 Clark Street, Chicago • Ceramic mugs: 4 WiFi Available

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Qualitative Research In-depth Interviews

BLM&P Research IDI

Nathan Fleischmann, age 27, worked at 444 N. Michigan Ave. Joshua R. Anthony, age 22, worked at 53rd and Harper, Hyde Park

Q&A What was a common drink? • Nathan - COD (Coffee of the Day) & Frappuccinos, at that time, surged after mid morning to early evening - especially in the warmer months. • Joshua – Hot coffee is what was usually ordered, but the adventurous people would ask for a caramel macchiato or a caramel frap. BLM&P Research IDI What did you like about Starbucks? • Nathan - Take turns running the shifts. They really teach you all aspects of running a coffee shop. It’s pretty checklist easy. But the variety of requests from people about drink preferences is what made it fun. • Joshua – It was a family environment. Free coffee, free stock options, health benefits. Describe your customers? • Nathan - We had a TON of Tribune regulars and local morning commuters. We had a lot of regulars from the Realtor building next door. Regulars like we knew the lady who got the “red eye” (coffee with espresso shot) every morning at the same time. (The tourists dominated the foot traffic from mid morning to late afternoon) • Joshua – You have your regulars who you get to know by name or by the drink they like to order or just some other unique form. BLM&P Research IDI Do you still go to Starbucks? • Nathan – Yep, just not at much as I used to. • Joshua – I occasionally go to see someone I use to work with; and there’s certain pastries you can’t get anywhere else. Why do you only go occasionally? • Nathan - I like a lot of the local places a lot. The local places tend to give back to the community more and their shops are more conducive to lounging around, they tend to be comfy. • Joshua – Because it’s over priced. Add your own comment • Nathan – Starbucks has been slowly converting to the auto drink espresso machine where the barista doesn’t have much influence on the drink anymore. It takes a lot of the personality out of your local coffee place. • Joshua – It doesn’t have a true coffee house feeling because they’ve incorporated too much into it.

BLM&P Research

Qualitative Research Focus Group

• Four Participants • Female, age 27, Bachelor’s degree • Male, age 32, College • Female, age 36, Bachelor’s degree • Female, age 58, Master’s degree

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Qualitative Research Focus Group • Topics of conversation • Starbucks usage • Attitude toward Starbucks • Discussion of Starbucks ad Starbucks Corporate Responsibility • Suggestions for Starbucks BLM&P Research

Qualitative Research Focus Group • Starbucks Ad • http://www.youtube.com/watch?v=ClM4pSv2hOo

BLM&P Research Qualitative Research Focus Group • Focus Group video clips http://www.youtube.com/watch?v=GhL6jHKNpHs http://www.youtube.com/watch?v=siR5g43FdQs http://www.youtube.com/watch?v=GH_WfiD2Amk http://www.youtube.com/watch?v=QXbaRO_nUus http://www.youtube.com/watch?v=bfGFsYRTAQk

BLM&P Research Quantitative Research Survey - overview • Online Survey (surveymonkey.com) • Survey opened June 24, 2009 • Survey closed July 14, 2009 • 21 questions • General coffee consumption • Starbucks specific • Demographic information

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Survey - Distribution • Facebook • Blogs including: • Craigslist • Bizzia.com • Twitter • Sponkit.com • Twitter Groups • 5 blogs before lunch • Starbucks, Caribou, Dunkin Donuts, McDonalds & • Bliss Tree/Kettle and Cup Nescafe related • Cape Cod Branding • Blogs including: • Sustainable Industries • Starbuckster • New West Missoula • Starbucksgossip • MommyGoggles.com • Flicker Starbucks group • Coffee Cup News • Crisiboy.com • Coffee Chats • Beyond Madison Avenue BLM&P Research

Survey - Distribution • Mall Intercept • Tourist Intercept • Century City (4) • Ogden Slip/Navy Pier • Watertower Place (1) • Very difficult • Easy- handed out to • Few results for time put in demographics we were • People put up barriers to missing approach • People were tourists, • Avoid eye contact waiting for an attraction to • In conversation with another begin, very responsive person • Listening to iPod

BLM&P Research Survey Results BLM&P Research

BLM&P Research Men BLM&P Research Female

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Top 3 Places to Purchase/Get Coffee Store # of Ranked Ranked Ranked Respondees 1st 2nd 3rd Starbucks 105 54 28 23 Independent 83 28 30 25 Local Chains 62 18 28 16 Dunkin’ Donuts 38 14 14 10 Grocery Store 37 18 8 11 Caribou 30 7 12 11 McDonalds 24 4 10 10 Home 12 5 3 4 Other 33 6 13 14 BLM&P Research BLM&P Research BLM&P Research BLM&P Research BLM&P Research BLM&P Research BLM&P Research BLM&P Research BLM&P Research BLM&P Research BLM&P Research BLM&P Research BLM&P Research BLM&P Research BLM&P Research BLM&P Research BLM&P Research BLM&P Research BLM&P Research BLM&P Research BLM&P Research BLM&P Research BLM&P Research BLM&P Research BLM&P Research BLM&P Research Starbucks Experiences Coffee & Tea

• Coffee tastes burned/too strong/over roasting/bad tasting – 36 • Coffee tastes great/good - 30 • Consistent/dependable – 31 • Good food and coffee options – 9 • Tea not special/poor selections - 3 • Too many choices – 1 • Coffee sizes too frou-frou/pretentious - 5 • Like: • Pike’s Peak blend roast – 1 • Holiday drinks – 1

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Experiences of Starbucks Environment • Baristas are friendly – 30 • Baristas are snotty/snooty/fake – 4 • Fast/Good Service - 20 • Too expensive/over-priced – 20 • Like ambience/3rd place - 20 • Don’t like atmosphere – 5 • Hipper-than-thou feel - 1 • Convenient locations – 13

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Starbucks Experiences Pastries & Food • Good experience – 5 • Pastries are divine – 1 • Not enough pastry choices/bad taste – 2 • Pastries only okay – 1 • Don’t like their food – 1 • Food okay but not at those prices – 1

• Like oatmeal – 1 (online debate on this, Starbucksters.com)

BLM&P Research Starbucks Experience Corporate Citizenship • Disagree with mistreatment of labor force – 1 • Hear about good employee benefits – 3 • Dislike/distrust brand image (yuppie, corporate business) – 2 • Abhor right-wing politics - 1 • Hate their mega-ness - 1 • Edged out funky/local coffee shops/prefer local shops – 8 • Screwed local bakery (3-day lemon knot drop notice) - 1 • I like their image - 1 • Like social responsibility – 7 • Like employee policies – 1

BLM&P Research Starbucks Experience Miscellaneous • N/A – 2 • Meh – 3 • Too much merchandising – 1 • Brew Starbucks at home and it isn’t burned, it is good – 1 • Hate tipping for normal service -2 • Starbucks Uber Fan (rave) – 3 • Starbucks Uber Foe (rant) – 2 • Lines too long – 1 • No pride in the products they serve - 1 BLM&P Research Suggestions for Starbucks Products • Lighter roast coffees • Stop burning coffee • Simplify drink names (Tall/Grande/Venti) • Increase # of flavors/specialty drinks • Continue product diversification; keep focus on coffee • Offer everyday coffee with lower price to compete against local brands, Dunkin Donuts (McDonalds will probably sell coffee retail) • More wholegrain sandwiches (relates to focus group suggestion) • Increase time between coffee-brewings • Offer more combo deals • Make sure food is fresh • Make a frequent drinker card (same idea as Focus Group) • Add sugar-free options to products besides just coffee (hot chocolate, apple caramel cider)

BLM&P Research Suggestions for Starbucks Products • Expand Clover program – bring fresh brewed coffee to more markets • Bring back training program for new employees (focus on drink preparation, especially foaming milk) • Espresso needs to be thicker and more “Italian” in style to make it good enough to not make at home instead • Bring back Lightnote! • Start with better beans • List fat content on foods/Offer really healthy food • Free refills on black coffee • Get better tea • Discard: • Any beans roasted more than 2 weeks ago • Any coffee ground more than 2 hours ago • Any brewed coffee more than 1.5 hours ago

BLM&P Research Suggestions for Starbucks Other • Lower prices • Walk-thru windows (in cities, at Kroger’s) • More drive-thrus • Improve treatment of Starbucks employees • Starbucks greenwashes – really go green (recycle, decrease waste) • No more expansion • Some stores can’t handle rush periods • Get a microwave so I can heat up a muffin • Watch out for McDonald’s! (Dollar menu?) • Model condiments bar after Starbucks Japan (simple syrups, not sugar. Higher quality.)

BLM&P Research Suggestions for Starbucks Corporate Social Responsibility • More sustainable products – not as specials • Stop using paper cups (except for “to go” customers) • Change bylaws to increase accountability for corporate behavior • Integrate more into local communities/neighborhoods (community initiatives, etc.) • Use local coffee in the area – good local coffee producers • Increase awareness about stuff Starbucks does for environment & community (help me feel less guilty about going there)

BLM&P Research Suggestions for Starbucks Environment

• More live music in the evening • Turn down the music • Train staff to be more warm & friendly, not so stressed out seeming • Bring back normal chairs with tables • Offer free standard Internet access/free internet all the time to everyone • Update store atmosphere, some are a little “cold”

BLM&P Research