Chairman: Starbucks commoditizing itself

SEATTLE, Feb. 23 (UPI) -- Seattle-based Starbucks Corp. is commoditizing its global coffee-shop brand and increasing its vulnerability to competition, Chairman Howard Schultz says.

The stores "no longer have the soul of the past," Schultz wrote in a memo. "Some people even call our stores sterile, cookie cutter."

The fast-growing coffee chain's interests in efficiency -- such as switching to automatic espresso machines and bagged coffee -- "overlooked the fact that we would remove much of the romance and theatre," Schultz wrote.

Starbucks used to have all its baristas pull espresso shots by hand and scoop fresh coffee from bins and grind it in front of customers.

"We achieved fresh roasted bagged coffee, but at what cost?" Schultz wrote. "The loss of aroma -- perhaps the most powerful non-verbal signal we had in our stores."

As a result of Starbucks' "commoditization," competitors including fast-food operators have attracted customers "who previously have been Starbucks customers. This must be eradicated," he wrote.

Starbucks confirmed the memo's authenticity to The Wall Street Journal after it appeared on a Starbucks gossip Web site.