The business stories that matter, by Fortune's Colin Barr
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April 25, 2008, 12:29 pm

Starbucks in the hot spot

The Starbucks (SBUX) media blitz continues. The Seattle-based coffee chain reminded investors Friday that it and partner AT&T (T) would roll out WiFi wireless Internet service at company-owned stores nationwide this year. The companies say qualifying AT&T broadband customers will get free WiFi service in more than 7,000 U.S. Starbucks stores. Starbucks dropped T-Mobile for AT&T back in February.

“We continue to build on the experience we know our customers expect from us,” said Starbucks technology chief Chris Bruzzo. “By partnering with AT&T as our U.S. Wi-Fi provider we aim to deliver a better value, greater convenience and seamless connectivity in a mobility centric world to our customers.”

Starbucks has spent recent days emphasizing the many ways it makes its stores customer-friendly. The company yesterday said it was refining its “entertainment strategy,” by giving up day-to-day management of its record label and seeking out “ways to enhance the customer experience through the use of wi-fi and other in-store technology.”

But recent numbers suggest that what customers want at the moment is not a richer experience, but a cheaper one. On Wednesday, Starbucks set off a sharp decline in its shares by slashing 2008 earnings guidance, citing a sharp slowdown in consumer spending in markets such as California and Florida that have been hit hard by the housing slump. CEO Howard Schultz said that while customers are visiting Starbucks stores less often, company research shows “they are not substituting their Starbucks Experience with coffee products from others.” Unfortunately, that sort of loyalty isn’t doing anything for Starbucks’ bottom line right now.

CEO Howard Schultz doesn’t appear to have a clue. Case in point, the confused stuffed animals or what maybe called Starbucks stuffed animals in the stores, what a waste of money, and of course they don’t appear to be selling. Starbucks had an easy life for such a long time that they don’t have a clue how to get in touch with their customers and make money.

Posted By Tim Beckner, Baker City, OR : May 6, 2008 10:26 am

Pikes Place is as pleasent as drinking yesterdays coffee grounds

Posted By Death by the Cup, St Petersburg FL : April 28, 2008 3:24 pm

Pike Peak or Pikes Place or whatever its called is HORRIBLE. I am dead serious when I say it taste like its been made with cigarette butts (actually, cigarette butts, old man feet and band-aids is probably more accurate)

Its 7-11 or Dunkin Donuts for me now

Posted By Pike killed Sumatra, St Pete, FL : April 28, 2008 3:18 pm

Pike Peak or whatever its called is HORRIBLE. I am dead serious when I say it taste like its been made with cigarette butts (actually, cigarette butts, old man feet and band-aids is probably more accurate)

Posted By Pike killed Sumatra : April 28, 2008 3:17 pm

Pike Place tatses like poop

Posted By Bill Colombo : April 28, 2008 3:11 pm

In addition to coffee that is so burnt tasting that it is arguably defective, the service has gone so far downhill that the purchasing experience is stressful. Even if I am the only person in line, getting the order correct and in a timely fashion can be difficult, especially when the entire staff is standing behind the counter talking about personal business. Not an indulgence at all. The only reason they do good business, in my opionion, is that they overpay for great locations. Which, of course, is reflected in the nearly laughable prices.

Posted By Jon, Philadelphia, PA : April 28, 2008 12:29 pm

I used to be an avid Starbucks customer, spending well over $1,000 per year on Starbucks coffee (namely, on Americano). In the past year, I started noticing a decrease in the quality of Starbucks espresso-based drinks. In the past few months, I have been having a 95% dissatisfaction rate from the quality of Starbucks-made Americano. This has not been specific to any particular Starbucks store — the experience was across the board. The problem was with my Americano no longer having crema that makes it such a wonderful drink. Every cup without crema (look it up if you don’t know what it is) tasted bitter — no better than cheap drip coffee in the lunch room of my work place. The last straw was about a month ago when I bought a Venti Americano, tasted it, and threw the full cup in the trash. It was a $3.00 Americano that tasted so bad that I could not force myself to swallow it. Fortunately, I’ve discovered a no-brand coffee shop (a shack really) just a few blocks away that happens to make the best Americano I have ever tasted in my life. They will be the ones getting $1,000+ I spend on coffee each year. I do not see myself going back to Starbucks.

Posted By Grey, Kernersville, NC : April 28, 2008 11:57 am

“The companies say qualifying AT&T broadband customers will get free WiFi service in more than 7,000 U.S. Starbucks stores.”

So you have to be a paying member of AT&T’s service? Aren’t the days of paying for Wi-Fi spots gone?
http://www.lipstickthispig.com

Posted By Head Pig Austin, TX : April 25, 2008 4:35 pm
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Colin Barr covers business and finance for Fortune.com. Previously he was an editor at TheStreet.com and author of the weekly Five Dumbest Things on Wall Street column, and an editor at Dow Jones Newswires.
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