It can be difficult for smaller, mom-and-pop operations to compete against corporate giants.
We’ve seen this pretty clearly during and after Covid.
Small, niche retailers and restaurants that might have carved out a loyal customer base prior to 2020 were swallowed whole when nearly everything shut down. Foot traffic plummeted to zero, and when things finally reopened, interest rates were sky high.
So many of these smaller businesses closed down. And a lot of them were bought up by their larger competitors.
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Now, it seems like most towns have a Walmart, Target, Starbucks, and a few chain restaurants.
And for many of these corporations, that’s exactly how they like it.
The Starbucks (SBUX) business model in particular thrives by being the only game in town. The old adage is that if you pass one Starbucks with a long line, walk a block or two, and you’re likely to find another one.
Starbucks’ business strategy hinges on both customer habits and convenience. Sure, it’s pricey to build up hundreds of cafes close to one another. And it seems redundant.
But in Manhattan, for instance, which has over 200 Starbucks cafes and sees millions of tourists and commuters each year, it makes sense.
Starbucks is a trusted name brand; most customers know what they’re getting when they go there.
And if you crowd out the competition, you’re more likely to capture spillover that might not otherwise seek you out.
Starbucks is releasing three new drinks this summer.
Image Source: Jeff Greenberg/Getty Images
Starbucks still has competition
Starbucks’ business model is strong, but not airtight.
The coffee chain has been dealing with a list of problems, particularly since the world reopened after the worst of Covid.
When many of us returned to the office and life began to exist outside the home once again, more folks started going to Starbucks.
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This sudden, renewed demand resulted in a bottleneck for Starbucks, which had been struggling with barista attrition.
So the cafe had to get smart; it has been investing heavily in its Siren System, which reduces preparation time, particularly for complicated orders (which are notorious at Starbucks).
But these changes don’t come overnight.
And many of Starbucks’ fiercest rivals have been releasing their own sugary, caffeinated, novel drinks in an effort to capture some of the pent-up consumer demand.
Chick-fil-A, for instance, has released its summertime lineup of peach beverages.
And Wendy’s recently rung in the summertime season with a release of new Frosty Swirls, which include sweet syrups running through already-popular Frosty treats.
Starbucks releases new drinks
But Starbucks has more than a few tricks up its sleeve. Just in time for summer, Starbucks is releasing three new drinks.
Called Strato, which is Italian for layer, the new drinks feature a layer of flavored cold foam atop the conventionally popular blended Frappuccino drinks.
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The flavors include:
- Salted Caramel Mocha Strato
- Strawberry Matcha Strato
- Brown Sugar Strato
The new Strato layer replaces the whipped cream topping that’s typically on a Frappucino.
Strato Frappuccinos will hit Starbucks cafes beginning July 8.
They’ll be available for a limited time in summer 2025.