The Big Gulp at Starbucks

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Historically, Starbucks has done a great job at balancing new ideas with efficiency, says Frances Frei, a professor at Harvard business school who has studied the company. A classic example: the way it trains us to order in Starbucks jargon, grande this and half-caff that. Serving tens of thousands of possible drink combinations would be an operational nightmare were it not for a regimented logic to ordering, a marketing flourish that helps establish the atmosphere of an Italian café. "The fight in any company is [that] marketing wants more things for the customer and operations wants less," says Frei. "The thing that is so beautiful with coffee is that they did both."

But what happens when Starbucks introduces drive-throughs, which are at 58% of the stores it builds today? It took a decade for the company to put in its first drive-through because, says Schultz, "we wanted to ensure that once we did, we didn't take Starbucks down this road of fast-food mentality." Again the dreaded FF words. Next year Starbucks will open some 600 drive-throughs, many on busy highways--a huge departure from the store's original Main Street philosophy. Here's why: drive-throughs significantly boost a store's total sales.

How the homey in-store experience translates to a drive-through is another question. Executives try to explain, but the disconnect is so obvious that the Starbucks drive-through is lately being reinvented. Some changes boost efficiency (an order-confirmation screen reduces errors), but plenty of the redesign is aesthetic. Neatly landscaped hedges and big drawings of coffee pots funnel you through a chute that takes you round to the pickup window, which is broad and deep and designed to visually draw you into the store.

"There's more ambiance," says Donald. And it may not sound so bad, once you consider what Gerry Lopez, president of global consumer products calls "the smallest Starbucks store you ever saw"--a vending machine that will start dispensing lattes, mochas and hot cocoa in train stations and office complexes next year. The potential, says Donald, "is limitless."

Where does that leave the quintessential Starbucks experience--lounging around a café, sipping a French roast, surfing the Web? Ready for an upgrade of its own. Walk into the Northbrook, Ill., store, and you will see where Starbucks is headed. Bookcases line one wall, overflowing with espresso makers, French presses, coffee beans, thermoses and mugs. Next to a display case of food is a shelf full of CDs and DVDs. The space devoted to preparing drinks has been reduced by a quarter and re-engineered to conserve movement and space. Vertical shelves set into the wall help keep workers in one place as they reach for syrup bottles and tea bags. By the door are bins of coffee beans customers can touch and smell.

In the words of Levi Smith, who manages another next-generation prototype in Thornton, Colo., the new Starbucks evokes the concept of "coffee merchandiser." It is lively and crowded, with a lot going on at once. If you ask nicely, you can even get a cup of coffee.