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A thought experiment for Starbucks

sbux_mug_small.jpgOn a recent trip to London, I was surprised to see Starbucks serving in-house drinks in nice washable mugs. In the U.S., all beverages are served in paper cups, even if they are for consumption in the store.

Starbucks has made good progress reducing the impact of its billion paper cups, but many commentators and studies show ceramic mugs, especially over repeated uses, deliver a more sustainable experience and lower greenhouse gas emissions. (For a review, see a good Triple Pundit post.)

Ceramic mugs also save money.

So, while sipping a free-trade drip, I thought about some of the arguments I would make to bring this model to the U.S. if I worked at Starbucks.

The only catch? All arguments have to pass a “I don’t give a damn about the environment” test. Only standard business case rationales are allowed, with no appeal to higher moral ground.

  • Material cost savings outweigh washing costs: Ok, I admit I haven’t fully scrubbed the numbers but the high level view looks good. An average ceramic mug lasts 3,000 uses and costs perhaps $2.50. A paper cup, sleeve and top lasts once and cost as much as $.05. That’s 60 times as expensive on a per-use basis. Of course a dishwasher has to be installed and run, and the mug has to be washed between uses, but I feel confident there is pretty good business case here (industry experts, please step in and trash me in the comments if you disagree).
  • Higher table turn: This is probably more relevant than the economics of cups. Starbucks’ strategy is not selling coffee. It’s the creation of the “third space,” a gathering place outside of home and work. The price of entry is a $4 latte. The problem is that, especially in busy locations, more people want to hang out in the cool space than there is room for.

    The solution? Ceramic mugs. No top and an un-insulated container mean that your drink cools faster. You drink faster, go back to your normal life, and free up space for other folks to come in and enjoy the space. Table turns are a very important metric of profitability in food service, and ceramic mugs help increase them.

  • Better customer experience and brand alignment: It was chilly and raining in London (surprise!) and I wrapped my hands around the cup of coffee and noted what a better customer experience the mug was. I felt better about the whole Starbucks experience than I have in a long time.

    There’s one more benefit. When I was done, I didn’t throw the brand I connected with in the trash. It’s a subtle distinction, but I’d prefer not to have my brand tossed in the garbage.

Thoughts? Anyone work at Starbucks and care to comment? Anyone had to make this case even to the managers of the company cafeteria?

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