2005 Consumers' Choice in Chains: Coffee/Snacks
Starbucks

Lines of customers waiting for their daily fix of coffee or tea can’t be wrong. Starbucks remains a master of sales and satisfying an intensely loyal base of fans. From tall vanilla no-foam lattes and chai tea drinks to pastries such as maple scones and blueberry muffins, its menu has expanded along with its segment dominance.

For guests on foot or in cars, Starbucks goes out of its way to be as welcoming as possible, providing what it describes as a “third-place experience” beyond work and home. To prove its point, the chain has added drive-thru locations to serve more people in urban and smaller-market locations. At the end of last year, the company had 700 drive-thru locations throughout the country.

Working toward a long-term goal of 15,000 units in the United States and 15,000 international units, during the past year Starbucks expanded its company-operated retail outlets by 669 units and comparable-store sales by 9%. The chain attributes increased traffic at company-operated stores to “sustained popularity of core products, new product innovation, a high level of customer satisfaction and improved speed of service through enhanced technology, training and execution,” according to financial statements.

Listening to and With Customers
Starbucks invests heavily to ensure that customers’ coffee experiences are beyond ordinary. Recently introduced offerings include the Black Apron line of signature arabica coffees, new flavored drinks such as Strawberries & Crme Frappuccino, iced green tea and green tea Frappuccino. New pastries, desserts and lunch items were launched to appeal to diners beyond the morning daypart crowd.

But it’s not only the menu that keeps customers so rabidly devoted to the brand. Starbucks locations are being reinvented with music and WiFi connectivity. The first Starbucks Hear Music Coffeehouse, in Santa Monica, Calif., opened last year. The company-operated store offers an interactive “listening bar” that allows customers to create CDs by purchasing songs from the company’s extensive library of music. The new unit format debuted concurrently with Starbucks’ XM Satellite Radio music channel, which also will be available in all retail outlets this year.

Beyond the traditional cafe environment, Starbucks has managed to grow sales and brand awareness in many channels to achieve its goal of being the “most recognized and respected brand in the world.” Through a combination of licensing agreements and partnerships, retail versions of signature Starbucks’ drinks such as Frappuccino and DoubleShot as well as ice cream and recently introduced coffee liqueur provide a handy way to simultaneously expand brand loyalty and awareness.

Convenience, a solid reputation and atmosphere that’s ideally suited to sipping beverages are strengths that Starbucks has parlayed into segment leadership.

Gold Winner
By now, Winston-Salem-based Krispy Kreme's story is the stuff of legend: an iconic brand built around sugar-glazed doughnuts, partly through the irresistible nature of the product but helped along by strong marketing.

Although the future of the company is in flux—outside consultants have been brought in to restore profitability—most problems can be traced to corporate headquarters rather than its customers' affection for the brand. In fact, Krispy Kreme nabbed the highest scores for food quality and value, easily besting segment winner Starbucks in both areas.

The company's most aggressive new product initiative has been its coffee program, which long had been underdeveloped. In addition to strengthening the quality of brewed coffee, it launched espresso-based drinks. Specialty and seasonal doughnuts also rotate into the product mix but rarely divert sales from the signature Original Glazed doughnuts.

Crystal Winner
Real butter, fresh eggs, brown sugar and “special” flour are the basic ingredients behind Mrs. Fields’ success. Although simple in approach, the company sticks to its mantra that “good enough never is.”

The chain recently tested an improved cookie formula, but consumer feedback was strongly against messing with perfection. As a result, Salt Lake City-based Mrs. Fields decided to expand its menu with more flavors and sizes to entice a predominantly female shopper.

This summer the Chocolate Paradise Cookie, with chocolate, caramel and toasted coconut, increased average sales by 10%. The company expects Cookie Cards, a version of its Big Cookie Cake in a four-by-five-inch shape with a personal message, to add to its success.

From their first step into an aroma-filled location to the trays of fresh-baked samples, guests are reminded there is no other cookie like Mrs. Fields’.