Why Starbucks is Ditching Discounts for Premium Drinks

Welcome to a new episode of Business Lunch! In today’s episode, we dive into the latest strategic shift at Starbucks, where the company is moving away from discounts and back towards a premium coffee house model. Roland and Ryan discuss the potential challenges of this move, comparing it to similar strategies seen in companies like Domino's and Target. Can Starbucks reclaim its reputation as a high-end coffee brand, or will it fall into the same traps that have plagued many businesses trying to shift positioning?

Highlights:

"Starbucks went from premium to discount—can they bring back the coffee house vibe?"

"Discounts attracted the wrong customers—Starbucks is now ready to ditch that approach."

"The challenge is, can Starbucks be both premium and everywhere?"

"Loyalty, not discounts—that's the new Starbucks strategy."

Timestamps:

00:00 - Introduction: Starbucks’ Discount Dilemma

01:09 - Shift to Online and App Ordering: A Retailer in Disguise

04:44 - Problem with Discounts: Attracting the Wrong Crowd

05:50 - A Return to Premium: Starbucks’ New Strategy

06:26 - Roland's Take: Discounts vs. Loyalty Programs

09:23 - Can Starbucks Gain Premium Positioning Again?

12:23 - Case Study: How Domino’s Pizza Made Its Comeback

15:00 - The Third Place: Rebuilding the Coffee House Vibe

16:15 - How Brands Lose Their Way: Insights for Business Owners

21:31 - Predictions: Will Starbucks Stick to Its Plan?

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