I have been sitting at Starbucks for the past four hours, setting-up my wordpress account and writing my first post, the now infamous Hello World (non copyrighted. yet…). As I was out for a smoke, I realized that in the past four hours or so, besides buying (twice) an AT&T Internet connection pass I had not bought anything direclty Starbucks-made i.e. no coffee, juices, cookies etc.
I also realized that neither did my direct neightbours, who had been working on their computers next to me, without consuming much.
And no one bugged us for that…
At first glance, it sounds like the stupidest business model in the world: rent / buy a place in a central city area, and let people sit there for free without consuming. Talk about crazy… But is it really?
Now that I think about it, I actually spent 8 bucks at Starbucks in the past four hours in Internet connection. Plus now I feel like having a hot chocolate…
What if that was the business model? Make a cozy place where people feel at home, and they will stay and eventually consume. But what about the loss related to people staying too long, not consuming, sipping into Starbucks electricity etc.?
Well, they are also part of the business model. They are selling…
Think about it. Outside of the convenient location, the friendly and cozy atmosphere why do you go to Starbucks? Because it is always full. Customers attract customers. Whether because it is a sign that the business is healthy or an opportunity to make friends, be part of the community, flirt… Yes that’s part of the business model: sit down and relax. We do not care if you buy, since you will make us some money regardless.
So of course Starbucks is hurting these days as are most businesses but this is likely to be due to the recent context, premium pricing, affecting “non stationary” customers as well as the abundance of locations (too many). But in the long-term, this is a winner.
That reminds me of a talk I had with my friend, entrepreneur extraordinaire, John Coletta. John is one of the managing partners and founders of Quartino
The other day, as a few friends of mine and myself were having diner at Quartino, we discussed with John about his recipe for success: the place is ALWAYS full, in spite of the economy. Among his many wonderful insights, some of the key ones were : “do no push the customer. You need to feel at home. If the customer feels pushed to buy, he will not feel comfortable and not return. Better a recurrent monthly 30 bucks per head, than a one time / yearly 100$”. Quartino’s business is doing even better today during the recession than what was planned in their business plan.
Make the customer feel at home and do not push for consumption as a solution for sustainable business model? I wish my other favorite places could read this before bringing me the bill immediately after the entrees….
Filed under: thoughts Tagged: | business, business model, hospitality, recession, recession-proof, restaurant, starbucks
