Starbucks, Peets and Family Bagel.

Starbucks and Peets Coffee are big chain coffee houes which has a very substantial
presence both in terms of market and brand. Their entry into the neighborhood will be a
formidable threat to “Family Bagel” coffee shop. “Family Bagel” has to come up with a plan to
counter the opening of the two chain stores within half a mile of their store. This plan will
suggest both offensive and defensive strategies to challenge and beat the competition.

The first charter of “Family Bagel” is to make a plan how to keep the current customers
and make sure that they do not switch to either Starbucks or Peets. The next charter is to
formulate a plan so that “Family Bagel” can attract customers who have rather gone to
Starbucks or Peets. In essence, “Family Bagel”needs to provide more value and customer
experience in comparison to its competitors with respect to cost.

The plan will take into consideration the following factors and compare those with
competition and advice what “Family Bagel” has to consider:

 Menu
 Price
 Quality
 Freshness
 Seating Capacity
 Hours of Operation
 Service

Menu:

Starbucks Peets Coffee and Tea

Brewed Coffee and Espresso Brewed Coffee and Espresso
Chocolate Beverages
Frappuccino Blends Blended Freddo
Tazo Teas Teas
Vivano Smoothies
Kids Drinks
Coffee Beans Coffee Beans

“Family Bagel” has to analyze it offering on the menu and compare with the Starbucks
and Peets offering to make sure that all the demographics of it customer base served. At the
same time it has to focus on its core product offering of Coffee, Tea and Bagels.
 Starbucks, Peets and Family Bagel.

Price:

The price of “Family Bagel” products should be lower to Starbucks or Peets in order
attract the new customers and keep the current customers from going to the either Starbucks
or Peets.

Quality:

“Family Bagel” should ensure on the quality of the products are on part or better than
the competition. They follow consistent process for the products they offer. E.g., Caffe latte
made by any barista should taste the same. In this way the customer has a consistently
rewarding experience.

Freshness:

The freshness of the coffee bean, tea, bagels and sandwiches and the raw materials has
to be guaranteed. In case a customer does not like a product a replacement should be offered
or money given back.

Seating Capacity:

“Family bagel” should estimate or survey other Starbucks and Peets and get an idea of
the total occupancy. They have to make sure they have adequate seating capacity and also
adequate number of barista so that there is no undue waiting time during the peak hours.

Hours of Operation:

The current hours of operation are 7am – 7pm. However, the competition is open till
10pm. It is strongly advised the “Family Bagel” should either close at 9pm or 10pm. In this way
they can attract the evening customers from the competition.

Service:

Service is the number# 1 attribute of “Family Bagel”. Management should ensure that is
conveyed down the employee/barista level. Customer Satisfaction should be measured
periodically and should be consistently excellent and any issues should be solved proactively.
 Starbucks, Peets and Family Bagel.

Advice for “Family Bagel” management to consider in their competitive plan:

 Change the name from “Family Bagel” to “Family Bagel and Coffee” which will give
awareness of a renewed business ready to face the competition and also focuses on its
core product offering.
 Offer Free-Wifi customers so that check e-mail or surf the web on their phones while
waiting in line.
 Since the business has been there for 15 years if the barista can greet the customers by
name it will great for customer retention.
 Have Artworks and Paintings of local artists and trophies of the local high school teams,
in that way the interiors uniquely pertain to the neigbhorhood as compared to
Starbucks or Peets.
 Provide free samples of new brews, bagels or sanwiches to customers and get their
feedback before putting it on the menu.
 Since the customers consists of joggers, bikers and high school students sponsoring local
sports activiites like Marathon, Cycling and high school football would spread the brand
name and improve customer loyalty.
 Create a reward card scheme whereby if a customer buy 10 times they will get a bagel
and coffee or a “Family Bagel and Coffee” coffee cup for free.
 Improve the delivery time for “to go” orders as many of the customers in the morning
are office-goers.
 Maintain the fixtures, faucets and keep the interiors and extererior impeccably clean>
When the customers steps into the store the ambience has to be fresh.
 Keep a suggestion box or feedback card so that management can get direct feedback
from customers about their products and services for implemenation.
 As Starbucks uses Fair trade coffee, it is important for “Family Bagel” to review their
sourcing and ensure that it is on par with the competitors. They should also organic fair
trade coffee and evaluate if it can be a differentiator with the competition.
 Starbucks, Peets and Family Bagel.

Value Curves for Starbucks, Peets and Family Bagel

5.0
High
4.5

4.0

3.5

3.0

2.5
Starbucks
Peets
2.0 Family Bagel

1.5
Low
1.0

0.5

0.0
Price Drinks Food Seating Hours of Service
Quality Freshness Operation

As we can see from the value curves “Family Bagel” needs to review the seating and
hours of operation. The price, quality and freshness are in better than Starbucks, however
management team and employees need to maintain this rating. The Service value is better
than the competitors; again as the competition intensifies “Family Bagel” will need to be
innovative to keep up customer satisfaction.