You own a popular local coffee shop, Starbucks moves across the street. What do you do to compete?

I agree with Brian wholeheartedly.

My strategy would be to provide free (powerful) WiFi, cooler environment like The Grove on Fillmore, awesome espresso and utilize technology like Foursquare to use "customer loyalty programs, such as "buy 10 cups of coffee and the 11th is on us"" which I advocated a year ago at coffee shops on Fillmore near my pad.

http://gsfn.us/t/1b92g

One thing that Starbuck's does well is marketing but making a good espresso is not one of their strong points:)

~Clint
@cazoomi

I would also do things like getting speakers that might appeal to my business clientele and perhaps some light music in the evening. Also, perhaps host Tweet ups...

There are certainly alot of Starbucks "haters" answering these questions. Yes Starbucks is corporate and you may find some bad stores, but that does not mean that they are all that way. Where I am there is no "local" coffee shop. Our Starbucks is our "local." They know our names and our drink preferences. We are greeted by name and even on the occasional time we go through the drive thru they recognize our voices. The pastries are not bad, actually they have some good ones and because of the power of purchasing on a large scale they can beat the pants off of a local shop making minor purchases. I don't like all their coffees but I do like some. They have a variety of coffees at times, but they do limit it to two at a time. I don't typically buy the "fru-fru" drinks as I call them, but an occasional frappacino is a nice change. They offer consistency and familiarity. Most of the employees live in the area, so they are not some corporate robot. They are an eclectic group of people with varied talents and tastes. Some connect better than others but if you are friendly they are friendly back. If you are nasty, well..... they are still generally friendly. "Our" Starbucks has the bulletin board for events and they support local events and charities.

They do have limitations, and as a "local" trying to compete against them you have to know what their limitations are and exploit them. Many are small and cater to the quick drink picker-upper. The one I go to could actually use more seating because it has become a community center. That is a good approach for a local to remember. Make your shop a place for people to gather. Of course you risk people just gathering and not buying. Try to attract discussion groups, book clubs, etc. by offering "group" deals, couple of pitchers of coffee and some eats for example.

I think a local owned shop, (and that is the better way to think of it, after all our Starbucks is local) would be much better off aspiring to learn from Starbucks rather than demonizing them. There is a lot that can be learned.

Craig, What a fantastic question to get the creative juices flowing.

@ Shakti, a fantastic write up on your behalf. I have thoroughly enjoyed the read up on both your comments.

Well, If it were my coffee shop, I would try and cater for all the different types of customers, devising a winning strategy for each type of customer.

I quite like the idea of John's, with the "Coffee Club", as this allows for an excellent marketing campaign, and the opportunity to test new marketing strategies, as this is an area that will continuously have to be monitored and redeveloped. If the Starbucks across the road sees that you are running a successful campaign, they will match it and improve on it, at the first opportunity to take your customers across the road. A CRM system would also highly beneficial, allowing for small little value adding services to be applied into the "Coffee Club" (free coffee and slice of cake on your birthday etc etc).

When I think of your busy business executive type customer, time is the biggest issue, so here are my thoughts on the strategy to apply for this type of customer. In terms of convenience, I would put in a "prompt ordering system", I’m sure there are different platforms that you have to make use of this type of service (similar to the service of your blackberry messenger type of platform). The type of service that your customer would be able to order prior to pick up, providing a time period that they expect to be there, providing their membership number or method of payment (for immediate pick - providing a walk in - pick up - and walk out system). A delivery service within close proximity of the shop would also be provided.

The secret here would be the level of convenience, comfort and level of customer service that you provide. You would specifically design strategies that would allow you to maximise and personalise these areas. I could elaborate on various strategies for hours on end, but for the purposes of this discussion, we all look forward to reading the different opinions brought to the discussion.

1. I'd win the battle in the geolocation game.

2. i'd set up a cool, hip blog, and post cool stories/videos of my customers, and journal about the coffee we make...the stories behind the beans, if you will...

3. i'd set up book readings, book discussions, and author lectures.

4. the question indicated the local shop was popular. so, remember why you were popular, and stick to that, get better. don't change to be like starbux...

5. and oh yeah, make the best damn coffee and give customers a memorable experience. and don't just say it, do it.

Starbucks is formidable - and I like Starbucks - so this is a tough situation.
Price would be one factor I would examine although I'm not a proponent of being the low cost provider. For sure all of your employees would have to be ambassadors for your business especially in knowing your customers and addressing them personally. All of us like to be recognized. Choose first rate products (coffees) and always be consistent. With a Starbucks across the street, you won't get as many second chances with customers.

I had three coffee shops and had this exact situation. Many of the thoughts on here are great.

Here is what I did:

As a promotion we gave half price espresso drinks if they turned in a used star bucks cup.

I started to (with permission) post pictures of our customers on our site.

I started naming specialty drinks after our customers. (The Reverend was my favorite, but we had a "Beth" and many others. All where the unique drinks they liked.)

We served breakfast muffins and bagels star bucks couldn't sell. We made them in house. Yummy

I realized there are two type coffee shop customers. Star bucks and local. We focused on making our place the local place, and didn't worry about the crowd that was going to go to Star bucks no matter what you did.

First of all, I’d pat myself on the back for choosing a fantastic location where Starbucks wants to compete with me.

Competing with Starbucks is similar with competing with Wal-Mart. You don’t. You coexist with them. That is very easy. A Starbucks will bring in new business to you. You just need to understand how to approach the new market. And you need to understand who your customer is. Does Ruth Chris worry about McDonald's? Hardly.
Two companies, Nescafe with instant and Starbucks with designer coffee, have had a greater positive influence than any other company in the coffee industry. Take advantage of the situation.

Starbucks entry means there probably is a market to be tapped that you haven’t touched. When you are a small shop, you may not have the power or resources to get the message out like Starbucks does. In fact, your presence near one means you will benefit from their marketing and advertising.

Even though I am in the coffee business, I often meet people at a Starbucks. Everyone knows the familiar. However, look how easy it is to suggest walking to small shop as an alternative. I do that often too.

Would I lower my prices to compete? At four dollars for a cup of Starbucks? Heavens no! I don't need to. They used their marketing and advertising to bring more customers to me. Am I going to attract those who have to go to Starbucks in the first place? Probably not. Most people go to Starbucks simply for the name.

Fresh coffee at Starbucks? Probably not. All coffee sold worldwide is roasted in Seattle. Gloria Jeans is all from Sydney, Costa Coffee from England. Mine? Fresh roast yesterday to seven days ago. Good coffee doesn't necessarily come out of an espresso machine either.

Next step? Find another location where Starbucks wants to compete with me!

Best,
Morris
YOMO Artisan Roast Coffee
http://yomocoffee.com

I was looking for something different and that after getting lost in the area I reached a coffee shop in New Delhi, India which turned 75 years last year and is one of the last vestiges of 'Old CP' http://en.wikipedia.org/wiki/Connaught_Place,_New_Delhi It's owned by a person over twenty years my age and that he and his family have become my friend. The owner's family has owned it from the start and that he quit his life of doing big business worldwide to be at the coffee shop to continue its legacy. By chance, I got to speak with him about his coffee shop which I had liked start from its entrance and so had entered it. He mentioned that he doesn't want to become like the coffee shop chains and that several others have shared with him to make changes with the times. I told him that the others might be more interested for themselves than for the coffee shop and that he doesn't have to become like a chain for maximizing the potential of the coffee shop and that it can coexist with the chains.

Over the times that I've met him, I've shared that I've teams of film makers, sound engineers, computer animators, graphic designers, web designers, IT experts, social media consultants, and branding and marketing specialists including a team (our company's new web-site is under development) of five graduates from National Institute of Design, Ahmedabad, India and I from Georgia Tech, my close relationships with other companies, and some of my grandparents who've been into diverse artwork including making television shows, designing and printing books, and journalism. I've mentioned to him that my teams would first learn the vision, the mission, the budget, and any ideas of the owners for the coffee shop and then would start any work including on its branding and marketing.

I've suggested to him that my teams would create a documentary film on the coffee shop, design and print a coffee table book on it, design and print its menu, personalize its plates, cups, glasses, and cutlery, consult him on enhancing the interiors while retaining the identity as desired, make a web-site, and market the coffee shop on/off-line. I've also suggested that my teams could organize music and other events at the coffee shop and get custom gifts made for the valuable customers. The first time I met the owner, he told me that I'm an unusual engineer because my formal education is in computer science and that he also wrote it on my visiting card on my request. This family and their coffee shop has served the greatest leaders and celebrities and so it was an honor to get such a note from him. There's construction work going on around its area and that after a few months, I wish that I would be of value to this coffee shop and its owners.

I suggest that the local coffee shop focus on Differentiation, Differentiation Focus, and Cost Focus strategies http://www.marketingteacher.com/lesson-store/lesson-generic-strategies.html and http://tutor2u.net/business/strategy/competitive_advantage.htm. If there's one thing that would critically matter for the local coffee shop is the people that would work on its branding and marketing and that I think that even a small budget on the right people can bring decent returns. For years, I've been making efforts related to arts, technology, and marketing besides other things and which helps me to share with clients on their diverse business needs. I wish the local coffee shops the best because I also like them even though I also think that the coffee shop chains have their own value. Best! Shakti Saran

Michael,

You should come to Fillmore to consult with these cafe's as these are great ideas.

The Grove had to initiate a Peet's type of #code system of buying a certain minimum to keep the unemployed out of the place as their sales were down 20% Y/Y.

~Clint
@cazoomi

My initial reaction is to focus on that which is different - proximity to store owner. The teams at Starbucks are very good. The product is predicatble, the process ironed out, and can be a veyy high quality and repeatable process.

And, at some point becomes inhuman, unhuman, disconnected from user to assembly line.

If the owner or near owner has the talents for names, ability connect, learn stories, get connected to individuals - can have an authentic experience in the community. And, only after the processes and product are as iron clad or near iron clad as sbux. I can rationalize after teh emotional connection.

It's hard. The authentic experience cements the owner to the register - which is not my idea of building lasting value of the risk/reward of entrepreneurship. To make my business different by ensuring it can't run without me is not a long term value creating strategy.

I would make it a club. No register seprating us. Come join me? We can make your experience together? Don't know. Hard call. Even sbux was trying to find their own sbux killer and go after the boutique-y peets like local, and struggled. And the locals themselves struggle.

What would be the risk in going subscription only. Shut it down and shut them out. Members only. $500 buy in and $75/mo. Like a health club. Monthly membership. No money changes hands in the store. Just a card to get in. Very high quality product. And, club like atmosphere. No lines. No cattle call. Leather, wifi, concierge style service.

I bet I spend $60/mo. Would I spend $75 / mo and have a rare and exclusive place for friends and clients?

The risk of 'making it' in a head to head is already lost. The question is how soon cut bait and what investor will fund a wild crazy attempt at toe-to-toe battle. Dramatic Difference, Why Believe you, Why Care?

Fun challenge. Thanks for asking.

I think that the food and beverage chains have been significantly improving on the personal care and attention front and so it could be a great challenge for a local F&B outlet to significantly differentiate on it. Kindly note that my inputs are primarily based on the India market which is one of the fastest growing coffee markets in the world and that has the potential to become huge. Some coffee shop chains in India besides taking orders at the counter also have waiters who take orders at the table and that they also try to build a warm relation with their patrons based including on the frequency of visit and the willingness of the patron. Other coffee shop chains in India only take orders at the counter, however, they've waiters who bring it to the patron's table and that they also similarly try to build a warm relation. The chains also have their own training programs for the workers besides trying to hire trained workers and that training can help in everything including in providing personal care and attention. I've even had great experience at some McDonalds in India in terms of how they greet and handle issues even if the order is placed at and collected from the counters and that there're no waiters to receive a tip for their service. I've also had great response from the admins of the community pages of the chains. I've even been offered free samples of new products to try by the chains. at The local F&B outlets should get value by focusing on the strategies that I shared in my previous post and that they should hire consultants who can realize as well as possible their unique circumstances for giving the best inputs. I've shared a bit on the coffee market in India on the Chief Marketing Officer - India http://www.facebook.com/cmoindia page. I share a bit on finance, economics, and business on the FINSSITE http://www.facebook.com/groups/330429946762 group. Best! Shakti Saran

Agree with others on customer retention, speed, price.

However, beat them with.... pastries!

Partner with a bakery that offers breakfast snacks that are better and fresher than Starbucks (this should be easy - their food items are NOT good.

Focus on what you do and why customers come to your coffee shop. Right now that may be because you are the only player. The challenge: Starbucks, due to their marketing and visibility gives people that warm and fuzzy - comfortable feeling. What is it that you do that gives people the WOW factor. Consider this: If you owned a small sandwich shop and McDonald's moved in next door, what would you do? Most importantly, don't wait. By the say, if Starbucks is moving in then they may know something you do not. What might that be?

Very interesting topic. I have traveled globally and found almost everywhere such coffee shops, ice creme parlors, restaurants etc that not only survive but sometimes do better business in that area than global companies. I think there is no global thumb rule except what people call" differentiation".
Last year, I was in Chiang Mai in Thailand for Asia Pacific Conference of one of our customers. Across our hotel/resort, there was one family type of Thai restaurant.After our dinner, we decided to walk around and saw this restaurant very crowded particularly with college students. Along with food, restaurant was selling home made ice creme. One scoop price was Baht 15 but if you pay Baht 40, you can eat as many as you like. Next evening we ate Thai food there which was quite delicious and followed by ice creme promotion of Baht 40 unlimited scoops. None of us could eat more than 3 scoops. But it was good enough to attract local people, students and tourists like us. We checked with the owner and his records were that hardly people eat more than 3 scoops on average, He was making money in ice creme sales also
To beat companies Starbucks in your area will be quite easy if you are owner and give your personal touch in dealing with customers. All the best

There are so many examples in business it's hard to know where to start, but two stand out. The first is how Blockbuster Video overtook the independent video store universe in starting in the late 80s through the 90s with aggressive expansion and acquisition. In brief, strong and smart independent operators found that Blockbuster's advertising and marketing actually increased overall demand while putting weaker shops out of business. This was a windfall for indy stores that survived, often because they offered a more personal experience (connection with/responsiveness to customers).

The other example is Dunkin Donuts. When Starbucks was in its most aggressive expansion and awareness-building mode, DD was, in the main, a network of shabby locations with no cultural identity except a familiar name and one memorable TV commercial (Gotta make the donuts...). Sluggishly coming to life, DD took advantage of the same effect smart indy video store owners used: the demand created by Starbucks marketing and word-of-mouth. DD remodeled stores; widened and fine-tuned its menu of food and drink items; kept prices below Starbucks; then intro'd clever new TV ad campaigns (America runs on Dunkin). DD is again a power player in the coffee/coffee drink and food item space. I haven't looked for the stats, but I suspect that DD's market share has risen while Starbucks has likely flattened.

These are classic David & Goliath business situations, and fascinating case studies.

My answer to this is to think local. Do what Starbuck's can't. Put up a local (physical) bulletin board for flyers and classifieds. Put photos of local people and events on the wall. As Michael suggested, bring in local musicians when you can. Provide space evenings and weekends for charity events. Name some special coffee drinks after local landmarks or people. Put up a dart board (a safe one). Make deals with local businesses to swap discount coupons (or "bring your coffee receipt for a 10% discount"). Decorate with friendly down-home furniture instead of the typical Danish-modern blond wood, and go retro-eclectic to make it unique. Keep a roster of regulars and ask them if they want their "usual" to be kept on a list. Then, when someone comes in their name brings up their drink order immediately. And finally, as Raj mentioned, pay attention to statistics and use that to advantage. A local shop can be flexible, agile enough to launch a new program quickly. If something isn't selling, take it off the menu or run a special on it. If something sells well, offer something with it, "Pastry 15% off with large latte." Many of us choose to shop locally, and are ready to respond to any marketing push from our favorite corner coffee shop. It's a very receptive market, and it's one of the few that's not looking for the best price.

@John You've mentioned the "secret sauce". What I have learned from 3+ million customers, is the outcome of the interaction between employee and customer lies in the "human connection". That is the part that is NOT so predictable, repeatable, copiable and measurable. But it is a factor the can differentiate. It can also keep you out of the realm of 'mediocrity' and 'commodity', because each interaction is unique, never to be repeated with exactness. It is the secret sauce that safeguards against customer feelings of "indifference", making them feeling unique and valued. Now that we have moved into the value-based economy, does it not make good business sense to focus on this potential area for creating value?

CHARACTER: Your local store can have local character. And that local character, done right, can have the same quality feel as Starbuck's. Do you have a mascot? Cartoon logo?

EMOTION: Grandy's in Texas used to have a little ol' lady going around serving tea to the tables. Who wouldn't feel warm with Gramma bringing you a glass? Give the love.

BE DIFFERENT. Starbuck's has the corporate constraint of having to keep their branding: decor, types of coffees, uniforms, etc. You can compete by offering different products, better products (not hard, since Starbuck's cannot buy the very best pastries, coffees and teas and remain competitive on margins, because of corporate salaries and fees)

KEEP CHANGING. Starbuck's has to get approval for everything - you can move faster - they can't keep up with you because locally owned shops can make faster decisions. You can be closer to your customer.

BE FRIENDLY: Who says Starbuck's has to be the enemy? Do some joint events. Create some synergy for the two shops together. 1+1=2.5 Bring more business into the area. And if other restaurants, etc. move in nearby, you will have already developed this great partnership, and can go hand in hand with a global leader.

What would I do to compete? Nothing. Just keep being me.

Why did I start a local coffee shop in the first place?

Why did my local coffee shop become popular?

Why should I become nervous and scared because Starbucks came on the scene?

These are some of the questions that we must ask ourselves before we decide to change strategy or do something that we may regret later. Competing is about competing and selling coffee is about selling coffee. Not everyone likes Starbucks coffee. Not everyone likes Wendy's, McDonalds, or Burger King's Hamburgers!
Not everyone likes Kentucky Fried Chicken, Popeye Chicken or Churches Chicken!
The list goes on and on and on. Did you see what I just said - three different competitors are selling hamburger, chicken, and so on, yet there are other competitors selling hamburgers, chicken, and so on. No competitor is shutting down and none of them is afraid of the other one stealing their business. Why? It's because no one is allowing themselves to become distracted by the other. Yes, we fail when we become distracted. In business and everything else, remaining focus on what our goals and objectives are, is key to our success.

So, to come back to your question about "what would I do to compete?"
The answer will always be "to remain focus on the reason that I went into business in the first place." What are my goals and objectives? Sure we have to move with the times and stay abreast of changing technology, fads, and so on, but our bottom line is always, always, always, staying focus and remaining calm.

Hi Craig,

You own a popular local coffee shop, Starbucks moves across the street. What do you do to compete?”

When big names coming to our area especially Starbucks it going to turn around the market.

For me living in Malaysia and if I have a coffee shops operating for past decades,
I have my own strategy :

The important things that customers eager about the originality of the products. For instances, in Malaysia, people loves toast and in Malay language they call "roti bakar" for me the best of 'roti bakar' because of the originality of its smell compare to Starbucks. Another example is the milk tea, in this country they call "teh tarik " the interesting about teh tarik , the tea drink being pull by hand and produced tea foam.

Furthermore no matter what Starbuck produce new products , my coffee shop can remained competitive because of the originality. As such, my current customer will be loyal to me .

There's a great image here about Starbucks "taking over" neighborhoods.. http://gatesofvienna.blogspot.com/2009/03/islam-scream-team-starbucks-jooish-...

You have to offer something that a corporate entity like Starbucks can't, a unique customer experience. If you have the space have open mic nights or poetry jams, offer family nights, or even setup a few chess tables and setup a chess and checkers/club group. You would be surprised how many people look for these types of things.

If you become more than a coffee shop, if you become their place to be on "Mondays" or whichever day of the week means something to them, you won't have to worry.

This is a great question. It's not about price. We run a triathlon and the big guys (think iron distance company) have moved into our market by offering sprint and Olympic races. So I help them (volunteer) on their races to see what they do, and make sure we do it as well or better. We don't have to give our product away, but we do offer better volunteer support, make sure the race format has lots of great signage, great food, and make sure we start on time. We will never be as big as they are, but if you offer a superior product/service, you will remain in business. For those coffee shops that do not offer the ambiance (cleanliness, granite counters, lighting, racks and such), have to realize the market can change and women (they control our market share as well) want a nice environment to make purchases in.

It's all about customer service and keeping the customers you have - and having them return more frequently.
sell an 'annual member cup' and offer to fill it at a bargain price. make the cup stand out by printing it with your logo - or choose several local charities (food bank, children's hospital, shelter, etc) and let your customers know how your annual cup program benefits the community and your customer with every visit.

if you are not already offering snacks and/or sweets, find the best you can and add them.
provide a good selection of magazines and papers and comfortable seating for your customers to enjoy. offer board games (checker/chess/etc on your tables) and encourage them to 'bring a friend'.
empower your employees and work together to get to know your customers and serve up a superior experience.

engage your customers, use fb and twitter and texting to let them know about special promotions.

It is obvious by many of the suggestions here on how to "combat" Starbucks that many of you are not customers of Starbucks. Let me point out to you some of the things they do that have been suggested. They have a drink reward program. I have a gold card with my name printed on it, that is not only a convienent way to pay but, because it is registered, I get a card in the mail for a FREE drink of any sort for every 15 purchases that I make. An additional advantage is that when I hand them my card they then have the opportunity to use my name. Good connecting.

They offer music for sale. And they have personalized cups that make is so easy to get your drink because what you want is written on it.

Depending on the location, they offer groups, music, games, etc. I was in Nashville this past weekend and stopped into a Starbucks near Vanderbilt. On their bulletin board they were advertising Trivia night (which near Vanderbilt is probably a tough game.)They were also supporting local charities.

Remember even though Starbucks is a large corporation many of their stores act and think "locally." They are staffed by locals and they are frequented by locals. So just reacting to corporate is not going to get you anything. You need to visit the store close to you and see what they are doing so you can react to that.

As some of the respondents have already pointed out, you're a popular coffee shop, so the threat from Starbucks is of losing customers, therefore you have to focus on retention. In addition, you need to focus on the areas where you can definitely beat Stabucks - which might be, say, fresh pastries as pointed out above - and not try to fight on areas you know you'll lose. Starbucks have a lot deeper pockets than you, so are likely to be able to undercut you on price, or offers. Instead, focus on educating your customers on why your coffee costs more (assuming it does) and showing them the value they get for that (hopefully a better quality coffee - otherwise you're in the wrong business - a unique atmosphere and so on). Another strength you have is that you don't have to create and stick to a uniform corporate atmosphere. You're probably paying your staff the same amount as Starbucks, but if your staff aren't a lot happier, friendlier and have a greater connection with customers, you're going wrong somewhere. So, again, this is a strength you and your staff need to play to, and make sure your coffee shop is a genuinely personal experience for your customers

In most cases, Starbucks has increased the interest in coffee drinking in the communities it opens stores in, helping mom & pop shops. Slate wrote about this a few years ago:
http://www.slate.com/id/2180301/

So in answer to the OP, I wouldn't take any drastic action -- last thing you want to do is muddle the value proposition that exists for your current customers. Instead, just focus on filling any gaps you may see in performance (customer service, costs, etc). But if you try to out-Starbucks Starbucks, you will lose your current customers and certainly not get theirs.

You need to set yourself apart from Starbucks. Maybe offer weekly or nightly entertainment or book or poetry reading. Other ideas like a game night with family discounts might work. Sometimes it may take trying some different special event options that would draw in a returning group of customers. For every customer that is a loyal Starbucks customer, there is another customer that is looking for something a little bit different. You just need to find that niche that sets you apart from Starbucks.

I recommend conducting a customer survey to find out what your customers like and dislike about your coffee shop compared to Starbucks. Best to use open-ended questions and ask people to answer while they are in the coffee shop. Then continue and communicate your strengths while reviewing your weaknesses to see if you can improve.
I suggest offering more options so your customers buy more. If people like to sit there a while drinking coffee and using their computers or phones, eventually they will get hungry. Try offering sandwiches, soups, or other options - see what is popular.
I recommend very quick service so people who want a quick take-out will not see a long line and go somewhere else.
I would not recommend spending money on something that will not increase profit.

These should also be of value:

"Focus on making your product, your brand, and your experience as good as it can possibly be," says consultant Andrew Hetzel. "You can't look to what Starbucks is doing as your barometer."
http://www.businessweek.com/smallbiz/content/jul2008/sb20080718_057710_page_2...

"Independent Coffee Shops Speak Up"
http://images.businessweek.com/ss/08/07/0721_indie_coffee_shops/1.htm

Also, Thank You Mr. Robert Venter for your comment above and that I look forward to discussing and perhaps also sharing and collaborating with you. Best! Shakti Saran

Never be against the competition. The key is to always be for the customer. It is simple you will never out Wal-Mart, Wal-Mart and you will never out Starbucks, Starbucks.

To late now for this part of the answers but you should always run your business like you toughest competitor is going to open up next to you next monty.

Today we found out that Tully's now has a point card system so they are finally rolling out the 11th one for FREE program.

This was something we asked for from our @cazoomi network in San Francisco for over 2 years from their management and they finally listened.

This type of point system to reward visits is simple yet one of the most effective ways to keep current customers and entice new ones.

~Clint
@cazoomi

All you have to do is to maintain and improve your services which contribute to your shops' popularity. Doable right? Starbucks is a giant coffee business known globally. Some people don't go there for coffee but merely for the sake of the brand. The good thing about popular local cafes is that customers visit them because of their good tasting coffee, good customer service, good ambiance, and some additional treats. These reasons mean customer loyalty so you don't have to worry. Then, invest some money for marketing campaigns. You can try online printing and order helpful marketing tools like banners and signs, posters, flyers, and stickers. If you're interested, check out my trusted online printing company: http://www.printrunner.com/

OK, so I do not drink Coffee. I stopped four years ago, lower Blood pressure 120/70, lower blood sugars (90), less anxiety flying and I sleep much better!

I truly feel a lot happier without Coffee in my life.

The Caffeine withdrawal was a nightmare, two weeks of banging Headaches. You can read about the negative effects of Coffee on http://www.caffeinedependence.org/caffeine_dependence.html

But, how would I deal with the Hypothetical Starbucks opens nearby?

I would welcome it! That means the area is becoming a Café destination.

I would revamp my product to “different” from Starbucks. I would NOT lower prices but instead offer Premium Prices and a Loyalty card. (Buy 4 gets one free) This has a 20% cost saving to the Customer but costs me not a lot!

Then I would look at the Product/Market WHO drinks WHAT and WHEN. As a small Café Owner/Manager I can adapt to the Market, but as a Corporate Starbucks does what it does!

Hygiene factors such as WiFi I take for granted.

Research shows that the combined triggers of wanting to smoke and drink a coffee are very powerful. A lesser person than me may give “Free” smokes with the Coffee.

In Spain the deadly combination is “Coffee with a Pastry”, from your lips straight to your hips!
Cheers!

1- Ensure you keep your existing customers by offering a "subscription plan" where they purchase, say, a month's ticket for a 10% discount. And add one free something when the card is filled out. This will reduce your net, but serve to maintain loyalty
2- Raise the price on at least one very popular brew to be sold as "exciting, new, revolutionary, premium, royal" - something to give it uniqueness and eclat. This is precisely how Starbucks succeeded so well in selling a 20 cent cup of coffee for $3.00. Their coffee is no better than mom's, but millions have developed the habit of a starbucks in the morning simply because it has social standing;
3- create unique to-go cups and holders that say: "style, chic, cool, phat".
4- start pushing your wares as a catering service. Deliver coffee at 10:00 and 2:00 when people need it most - and will pay the most for it.
5- Bomb the Starbucks

Make no assumptions. Talk to your customers, observe them or hire an ethnologist who is highly skilled in studying the patterns of your customers. Know exactly why you get repeat customers and why some customers are not repeat. What do they need? What unique services and environment can you provide? I also wouldn't assume SB is your competitor for all audiences. There may be needs customers have that neither you or SB are fulfilling. If you know what those are, that puts you way above any competition.

The strategy is (quoting Mr. Kleiman) to "be for the customer". Serve and differentiate. The tactics would depend on the environment and demographic. Furniture, products, events, hours are all tactics.

Reducing price is a grave mistake when you're actually selling a service, and not a commodity. You don't sell coffee, you sell comfort, camaraderie, fun, wake-me-up. If you sold coffee as a commodity, you could close your shop, get a bike and a hotbox, and sell coffee - something warm and brown that heightens blood pressure and increases calories.
Since you're selling a service, reducing price tells the buyer that you, yourself, think less of your service than you think of your competitor's service.

Differentiate yourself. In my neighborhood their is a Starbucks and not so far away a Euro style café. Both are busy, the clientele are different, they cater to different needs. In the Euro café they compliment the coffee with crepes, salads and light omeletes, the clientele are taking a more leisurely break, there is more conversation and less technology being used. The drinks are served in china cups. In Starbucks customers, many on their own staring intently to glowing screens, are gulping down their coffee out of throw away cups with plastic lids. Less conversation, lines of people waiting to be processed and less of a 'fun' atmosphere, it looks like people on their way to work ... rush, rush, rush.

As a local coffee shop owner I have variety to cater to different segments of people and I would have built the loyalty too, I would introduce price optimization and Loyalty programmes
So probably we would be competing in two different areas with probably a little bit of Overlap

over the period of time lot of big players are there in the market, most of the players are well known just because of the brand. people use to go there just to show-off or reputation. i been to cafe coffee day, the store appearance, lighting system, sound system was excellent.their way of hospitality also very good. when i tasted a cup of coffee over their, i realized the there is no point of going and wasting money and valuable time. there is no value addition in the product, only just for the sake of enjoying with beloved one. these stores makes people sit for the longer time by creating the fame that, It is the place for relaxation.

If you ready to give best quality and service. people are ready to loyal to you.

http://www.nichesuite.com/

Drop your prices and accept lower margins or figure out why you are better and invest in advertising.

Sell the same Starbucks coffee for for (even 5 cents) less among other coffees and items. Post a tasteful sign that says "Starbucks for less, Support your local retailer"

I would do the killer combo and I would not lose any sleep over it. The killer combo is a solution that I found that fixes Groupons and it's clones #1 problem witch is that you get a huge rush of new customer that are bargain hunter and the business owner has no way of retaining them. The solution is to combine it with Text Message Marketing and Mobile coupons. If you do this the results in 2 weeks will blow your mind. Let me know and I can set it up for you or I can give you a promo code so that you can get 10% off and do it your self. Go to http://www.monsteraz.com or text the word "EASY" to 41242.

Best regards,
Sterling