On Starbucks, Bistro Boxes and the iPhone

Starbucks sells coffee. We know this. They sell a lot of coffee. We also knew that. However, having developed a taste for the stuff only while in college, and not during my 18 formative years in the coffee paradise of Seattle, I had no idea how much coffee Starbucks actually sold in Seattle. It's quite staggering. Everywhere you go you see the green straws and iconic Starbucks logo. Occasionally you see a Tully's cup, or Seattle's Best, or even Pegasus, but Starbucks is king. But even here where coffee borders on a drug, it would seem that one can only drink so much coffee per day. And while some scoff at this assertion, it's mostly true. However, Starbucks sells much more than coffee. They sell snacks, yogurt and granola parfaits, pastries, breakfast sandwiches, small lunches, and now, bistro boxes. These boxes grabbed my eye as visually attractive, catchingly named and priced ($6.95) at a price both agreeable to consumers and likely high margin to Starbucks. It's a play into the ultra-competitive lunch market. Starbucks has the built-in hook of coffee, as loyal java consumers may become loyal java AND lunch consumers. But beyond coffee and food, Starbucks sells what every successful company sells: an experience. You go to Starbucks for the friendly staff, homey wood paneling and a small bit of luxury, be it a Macchiato or Cappucino. Starbucks is selling an experience, an emotional one. The coffee and the food are merely deliverers of the experience, cogs in the wheel. Enough about amorphous feelings, what about the iPhone? Starbucks was one of the first to accept payments via their iPhone app, via a built in barcode (no Starbucks pun intended on the "via"). The app interface is sleek and simple to use. The real gain is not convenience for the consumer, it's reduced credit card fees for Starbucks. Instead of paying a fee (which often has a floor) per transaction, Starbucks pays only per reloading of each mobile card. Each transaction using the iPhone (or mobile card) has no cost, since no credit card is being used. It's genius and the savings go directly to the bottom line. Bistro boxes and the iPhone, two huge reasons Starbucks will continue to grow.