I stopped at a Starbucks the other day to get a cup of coffee for a friend of mine. $3.25 for just plain old black coffee. Nothing fancy or foamy or frappe. There was a line 4 deep to buy their products and the seating area was full with people who looked like they were camping out for Black Friday. Seriously – you address your Christmas Cards at Starbucks?
Doing a little research, the cost of goods (raw materials) runs under 20% and the net pretax margin is also around 20%. The rest of the cost is the experience –location, staff, ambiance and, of course, prestige. Who would have ever conceived this 20 years ago? Coffee then was just a commodity; now it is an experience wrapped around a commodity.
Do you think a commodity like carrots could ever have 20,000 stores around the world devoted to providing a superior product delivered through an extraordinary experience? It sounds far-fetched, but unless we think big and dream even bigger we will never know. It is great to go to work each day and fulfill the existing needs, but showing up engaged to create the next thing that is in demand could be very rewarding.