Where Starbucks is succeeding at store design where others fail

There’s no doubt that Starbucks coffee wins every time the consumer thinks about high-grade coffee and friendly service. Starbucks has become the fav spot for having professional meetings (even though it is crowded and noisy) and hanging out with friends and office colleagues.

Starbucks in SEA

As a product designer and consumer, I have always been intrigued by coffee's markup. It is always exciting to see consumers not mind paying a premium for coffee at a chain like Starbucks. Consumers in South East Asia (SEA) are very cost sensitive, but Starbucks can still outperform many small and medium coffee chains. Starbucks is a crowd favorite here in Singapore 🇸🇬. But it still struggles to perform in countries like Vietnam 🇻🇳.

One of the reasons why Starbucks fails in some of the SEA region countries is because of its pricing. The second reason is its lack of customization in the array of coffee drinks to the local taste. For example, Starbucks doesn’t offer egg coffee in Vietnam, a local delicacy. And the third reason, Starbucks only uses Arabica coffee beans while some countries prefer Robusta coffee beans.

But like I said, in Singapore, due to the country’s metropolitan nature and crowd, Starbucks still performs well even though the pricing might give a teary eye to some people. In Singapore, Starbucks competes with local brands like FunToast, BreadTalk, ToastBox, and Ya Kun Kaya Toast. These brands have customized their offerings to the local tastebuds and offer coffee + eggs + butter-toast at a fraction of the price compared to Starbucks.

But after paying a visit to each of the stores, one thing stands out among Starbucks stores that are lacking in these local chains. Guess what? It’s how each brand prefers to layout and design its stores.

Store Size & Luxury

If you compare Starbucks with any of its local competitors, you’ll realize that the local cafes pale compared to even an ordinary-looking Starbucks cafe. That is because walking into a Starbucks cafe feels like a luxury. It’s well lit with dim yellow lights, the smell of coffee, and designer paintings or a large mural on the enormous wall. Also, in terms of seating, Starbucks outperforms everyone else. Their choice of furniture and chairs is very desirable, attracting customers to their stores. It is also a great marketing tactic, where a customer who once comfortably sat tends to spend more than the one who TakeAway their order.

But Starbucks can spend that much because their markup on coffee is enormous. I always see two dollars ($$) besides a Starbucks cafe in Singapore compared to a single dollar ($) besides that of local restaurants. Here’s a small comparison for black coffee at all the local joints I mentioned above —

1. Starbucks — 4.50$ (Brewed Coffee)
2. FunToast — 1.30$ (Coffee O)
3. BreadTalk — 4.80$ (Long Black)
4. ToastBox — 2.20$ (Kopi O)
5. Ya Kun Kaya Toast — 1.6o$ (Coffee O)

(In Singapore, the letter “O” besides Coffee/Kopi) signifies Zero Sugar or no sugar variant)

Accessibility & Friction

While most stores I visited in Singapore wanted to control the flow of straws, tissues, containers, and sugar, Starbucks gave customers the freedom to pick and choose as many as they liked. It was a major distinguishing factor for me regarding storing layout and access to small ticket items that make up for the recurring expenditure at a cafe.

I always feel shy and inconvenient asking for an extra straw, a cup holder, tissues, and sometimes even an extra pack of sugar. But since people often ask for those things, Starbucks decided to take them out of the barista’s way. This saves the employees time and establishes trust for consumers. I still can’t believe other coffee chains didn’t copy this trick yet.

Another thing that increases the retention of a Starbucks customer is having a chance to buy collectibles made by local manufacturers but branded exclusively for Starbucks. Those bottles and tumblers aren’t cheap. But they have a premium finish, and consumers get $0.50 off when they bring their own tumbler/mug 👇.

Yes, we offer customers $0.50 off of the price of their handcrafted beverage if they use their own tumbler/mug. However, do note that it is not applicable in conjunction with other promotions (e.g. breakfast set, coffee refill).- Starbucks FAQ

End Notes

Other factors make Starbucks more desirable than others. Like having their coffee drinks branded tastefully, the recognizable cup sizing, and seasonal drinks that come and go every year. But to me, the way they lay out their stores, provides spacious seating, and reduce friction by letting people roam around collectibles and take any number of tissues/straws to their liking stood out to me more. It shows me that being intentional with design can help us stand out in a crowded market and further push the business forward. In this case, Starbucks’ premium pricing and high markup cost is something people constantly find reasons to pay for, even though they would prefer something at lower pricing.

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