【Competitive Strategy as a Story】Why did Starbucks choose to expand its stores through directly managed stores instead of franchising?

In a nutshell

1. The mighty have fallen. In an age where even Ikinari Steak suddenly closes, a dynamic strategy, not a static one, is needed.
2. Starbucks expanded its stores through directly managed stores, not franchising. This seemingly irrational strategy created a competitive advantage.
3. A timeless masterpiece that I want to give to everyone who has to think about strategy. Let's read Competitive Strategy as a Story.

The fall of Ikinari Steak

In 2017, Ikinari Steak was enjoying its heyday.

In July 2020, it is on the brink.

On this blog, I once thought about a strategy in September 2019 under the name "The Society to Save Ikinari Steak," but alas, thinking about strategy is difficult.

【Ikinari Steak】The Society to Save Ikinari Steak

Furthermore, with the entire restaurant industry facing difficulties due to the current corona crisis, it is a daunting task to draw a map for survival.

But if you have the ability to draw a competitive strategy as a video to survive in turbulent times, it will be a valuable ability. It will be the key to show the exit in a snow-covered mountain where you are stranded.

From "Competitive Strategy as a Story - The Conditions for an Excellent Strategy-" (Ken Kusunoki/Toyo Keizai Shinposha) clearly shows the characteristics of an excellent competitive strategy. It is also an ideal book as an introduction to strategy theory in economics. This time, I would like to pick up Starbucks from the many examples introduced.

Starbucks, sticking to directly managed stores

Starbucks is now one of the top coffee shop groups in the country, but its store expansion is surprisingly through directly managed stores.

Normally, in the restaurant industry and other store expansions, the franchise method is generally used to prioritize cost advantage and speed.

In fact, among the major coffee shop brands, Starbucks Coffee is the only one that insists on direct management.

Why do they insist on directly managed stores?

That's because Starbucks has more value than just a coffee shop, and it has the aspect of being a third place (a third place other than home and work) that provides "a moment of relaxation in a stressful daily life."

To surely convey this value to customers, it is necessary for them to actually visit the store and experience the atmosphere.

To have them experience it, it is necessary to open as many stores as possible in high-traffic locations that are easy to see, and to increase the points where they can experience it.

With franchising, it is difficult to maintain the quality of the atmosphere that will satisfy customers and to open a large number of stores in close proximity where profits would be eaten up, so they dare to take the high-cost direct management method.

Since this is the opposite of the strategy of ordinary coffee chains, which prioritize share through franchising, it appears to be an irrational strategy to competitors and is never imitated. However, Starbucks has steadily turned its customers into fans.

Competitive Strategy as a Story

Starbucks' strategy was to gradually increase its customer base through a direct management system.

This strategy is not just a static strategy such as a matrix or positioning, but a dynamic strategy of making customers experience relaxation and turning them into fans, while preventing imitation by rivals.

It is truly building a competitive strategy as a story, where if you do this, this will happen.

To build this complex strategy, a deep understanding of strategy is necessary. It is not something that can be created overnight.

From "Competitive Strategy as a Story - The Conditions for an Excellent Strategy-" (Ken Kusunoki/Toyo Keizai Shinposha) contains numerous examples of how this complex strategy was built and their common elements.

Although it is a rather thick book, I have read it five times. I highly recommend it.

Aside

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For details, see below. https://baddyworkout.com/blog/2017-01-04-start/