Regarding my last post, Steve raises an important question, “how (do) you think Starbucks should respond to the insistent analyst and market pressure to increase in-store sales each year?” First, I would ask - do the analysts and markets truly reflect an interest in same store sales volumes or is it an interest in the growth and profitability of the business? Profitability, I would say. Second, I would say it is investor expectations that are creating the pressure. Analysts are only doing what the market wants – pressuring for short-term information about short term results.

Investor expectations drive the market and, unfortunately for the most part, investor expectations are focused on the short-term – 1, 12 months. This is a predicament that has been on the mind of every CEO of publicly traded companies for quite some time. Back in 2002 Daniel Vasella, CEO of Novartis explained it very well (See this Harvard Business School article.) http://hbswk.hbs.edu/item/5194.html In a nutshell Vasella says that while quarterly CEO updates are expected and part of the fabric of today’s market paradigm, CEO’s and operating officers “can become preoccupied with short-term 'success’, a mindset that can hamper or even destroy long-term performance”.

On the other hand, the article goes on to say, in today’s age of transparency we have come to expect the CEOs of publicly traded companies provide as much information as possible, including quarterly and annual business projections.

Expectations. Like many other areas of our life, the marketplace has become more interested in quick, short-term gains than in long-term sustainable growth. Day traders, high turnover funds. When investor expectations focus on long-term growth and return rather than quick profits, the pressure for quick fixes will be lessened and short-term forecasts will be just informational and not market-moving events.

Regarding adding products, I don’t believe it’s a bad thing to add to your product offerings. What I don’t agree with is diversifying outside of and diluting the brand. Starbuck’s mission statement: “To establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles as we grow”. I submit that a croissant / muffin approach to breakfast accessorizes the coffee – the focus of Starbucks better than a big plate of eggs and bacon hot off the grill.

In response to Jonathan, who fears Starbucks will go out of business if they stick to selling coffee: Starbucks has been in business over 35 years, since 1971. For most of those 35+ years they sold nothing but great coffee / coffee accessories. I don’t think sticking to their mission will do anything but make them stronger.

Patrick is right on the money when he said “At McDonalds its "I'm having coffee with my meal." at Starbucks its "What'll I have with my coffee."

Have a vision and be BOLD enough to stick with it for the long term. Thanks for the comments.

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