My wife and I were visiting our local Pekoe Sip House this morning and she got a chai, commenting that she really liked their drinks at this particular café. When she tasted her drink, however, she found that she didn’t like it this time, commenting that “last time they added agave, this time they didn’t. Maybe they just forgot?”
It got me thinking about what differentiates Starbucks (Nasdaq: SBUX) from these local coffee (and tea) houses, and it’s the very same thing that has made McDonald’s (NYSE: MCD) an international powerhouse: consistency
Travel the world and if you walk into a McDonald’s and order a burger, you know exactly what you’ll get, they have consistency down to a science, to the point where it’s almost like you’ve traveled back to the first McDonald’s in Southern California. Beijing or Moscow, Bahrain or Mumbai, their food looks, tastes and is presented identically. Even if you don’t like the food there, you have to admit that they’ve transformed the notoriously random process of cooking into an assembly line that even Henry Ford could love.
In the world of coffee, it’s Starbucks that has applied the same mantra. They don’t have “baristas” who tend to make stronger or sweeter drinks, they have precisely measured recipes that ensure the latté you drink in Mexico City tastes identical to the one you had two weeks earlier on Chicago’s Miracle Mile or perhaps while walking down Bourbon Street in New Orleans.
If you’re in the world of franchise business, you already live and breathe the necessity for consistency. Maybe a given franchise business has some ability for you to localize or imprint your business in a way that’s slightly different to other franchisees (an example is the lattitude that Mailboxes Etc offers its member companies) but generally what you’re buying is the “cookbook”, the ability to be more than just a standalone business, to be a part of a national or international enterprise.
But there’s a downside with this lockstep march towards consistency too, one that’s also demonstrated when a local business is far better than its franchise alternatives: consistency creates boredom. I mean, if every single time I go into Starbucks I know I’ll get the exact same cup of coffee, worldwide, why not be daring and try something new, something different, something local?
Worse, when everything’s boiled down to a cookbook, that means that competitors can use the same basic cookbook, meet you on consistency, and compete — and perhaps win — on price. That’s when we see consistency inexorably march towards commoditization, and that’s a massive headache (as my co-author Linda Sanford and I wrote about in Let Go To Grow too). It’s outsourcing of a whole new dimension.
So was Pekoe making a mistake when it failed to be consistent with its cup of chai this morning? On the one hand, yes, because it’s an axiom of the restaurant business that “you’re only as good as the last meal you served”. On the other hand, without some sort of variation in what they serve, they’d lose some of their appeal, some of their “hand made” charm. It’s the very fact that they don’t have a cookbook that makes Pekoe an interesting and appealing place for a cup of tea.
What do you think, dear reader? Is consistency the most important characteristic of a successful business, or is personality, variation, experimentation more important?