Saturday, September 16, 2006

Tall double-shot of trouble

These haven't been the best of times for Starbucks.

First the caffeine specialist finds itself in hot-tea water because of a promotional giveaway that goes awry. Employees were invited to pass along a chit for a free iced latte to friends and relatives. So many staffers obliged that the chain decided to rescind the offer. Bad, bad move.

Caribou, a small but plucky competitor, tweaked the tiger’s tail by offering to honor Starbucks’ coupons. Then a Starbucks customer filed a lawsuit seeking redress for the discontinuation of the deal. She’s asking for $114 million, which is a lot of coffee even at Starbucks’ prices. But she asserts the chain would’ve spent that much on the free lattes, and wants to collect the money through a class-action suit for distribution to the people who were left dry.

Then some of the chain’s baristas decided that enough was enough; they couldn’t keep idly watching while customers bilked the chain. It seems that some patrons were asking for lower priced menu options, then doctoring them with Starbucks’ free milk to made a close approximation of pricier quaffs. Add enough half-and-half to an iced Americano, stir vigorously, and you have a more-than-passable ersatz iced latte, for half the price of the genuine item..

Employees decided to blow the whistle on the cheats by disclosing their ploy an a website for devoted Starbucks followers,, But instead of rousing outrage, the postings opened an easy path to the Dark Side for heretofore honest customers. Some hardcore fans no doubt figured they’d give the trick a try and order the lower-ticket drinks.

It’s another indication the chain may be getting some pushback on its prices. Earlier, reports had surfaced of die-hard fans rethinking their preference after noting how they burned through money loaded on their Starbucks cards. You may not appreciate the aggregate outlay to the chain when you casually spend four or five dollars at each visit. But with the cards, you can’t help but notice that a $50 balance is gone in a week.

As if financial outrage wasn’t bad enough, Starbucks found its morals being slammed after headquarters resurrected the brand’s original logo for an anniversary celebration. Like the present-day version, the retro trademark features a mermaid. But you’re reminded much more, um, pointedly in the older incarnation that the Starbucks mermaid didn’t wear a bikini top. It’s hardly a Paris Hilton commercial, but it was racy enough to outrage an elementary school principle in the chain’s home state of Washington, as extensive press coverage attested.

But wait—there’s more.

News emerged this weekend of yet another lawsuit filed against the latte maker, this time by the U.S. Equal Employment Opportunity Commission, for violating the rights of a disabled former employee. The woman parted with the chain in May 2004 because, the EEOC asserted, her psychiatric conditions weren’t accommodated under the Americans with Disabilities Act. It contends that Starbucks knew the woman had issues when it hired her three years earlier. Concessions were extended to her during the early years of her tenure, but that tolerance changed when a new manager assumed responsibility for the plaintiff’s store, the suit alleges.

Even if all that agitation is counterbalanced by the purchase of 46 coffeehouses from Diedrich Coffee for a mere $13.5 million, it still has to be a bitter brew to swallow.

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