Local coffee shops versus Starbucks; how they measure up

How Independent Coffee Shops Are Competing With Starbucks

Starbucks is one of the largest restaurant companies in the world and continues to dominate the coffee industry. With this coffee titan on practically every corner, how can independent coffee shops compete?

Not only is it important that they offer similar perks as Starbucks does, they also need to stand out and pull customers away from them. Fortunately, many local coffee shops are able to survive and thrive despite constantly being in Starbucks’ shadow.

In order to stand firm, independent coffee shops are focusing on quality and shouting local pride from the rooftops. They are also taking a page from Starbucks’ book and utilizing technology and loyalty programs to help them compete.

Many independent shops also focus on providing something special — a unique sales proposition that makes them stand out from Starbucks and other independent shops trying to do the same thing.

A Focus on Quality

Independent coffee shops have to be better in order to pull customers from the big brands they already know. This is one of the major benefits of competition in business: It forces companies to be better.

Many local coffee shops make their brew into a craft and pride themselves on its quality. Because they don’t have droves of people coming in and out, they can take the time to create a cup of coffee made with the best ingredients and the best techniques.

This isn’t to say that Starbucks doesn’t have the resources to create quality coffee, but independent shops have to up their game in order to compete.

The competition with Starbucks and other local coffee shops kills any complacency and sparks innovation. Successful independent coffee shops are competing by creating quality cups of coffee that will get customers coming back.

Young woman enjoying a beverage at her local coffee house

Local Pride

One major perk that independent coffee shops have going for them is that they are local. Some people drink coffee as a way to jump-start their day and use it as a practical tool, while others look at coffee as a hobby. These are the people who are less likely to frequent the familiar and easy Starbucks down the street for a latte. Instead, they prioritize local business and quality coffee.

Some indie coffee places may even give back to their community through charity or volunteer work, which is another local effort that can encourage coffee drinkers to support them and not large conglomerates like Starbucks.

The atmosphere created by an independent coffee shop is what Starbucks is most concerned about — not competition like Dunkin’ Donuts. Independent coffee shops can do a lot for themselves by extolling their local pride and creating an atmosphere for casual coffee drinkers as well as those who view coffee as a hobby. For those who are serious about coffee, they may not be impressed with their Starbucks fare that anyone can get anywhere.

Hand with iPhone ordering in coffee shop

Implementing Technology

Technology has done a lot for Starbucks and their success. Not only has their Wi-Fi helped to solidify their position as a third place for customers to be between work and home, they’ve also worked to create an app that has revolutionized how their product is sold. Their app allows customers to interact with their account, utilize mobile ordering, and pay with their phone.

For the people who frequent Starbucks because of their ease of access, their app made things a whole lot easier. In fact, in October of 2014, 15 percent of their sales were made through their mobile app. Since then, the app has only gotten more efficient and popular.

For independent coffee shops looking to compete with Starbucks, technology can help. Offering Wi-Fi and being diligent about social media marketing are important, and so are mobile apps and their capacity to help customers order, pay, and participate in loyalty programs. The most important thing to keep in mind when it comes to mobile apps is knowing your customer base, understanding their wants and needs, and, if you decide to go the tech route, designing your app to appeal to them most.

Customer loyalty concept on a grey background

Loyalty Programs

Loyalty programs work in a lot of different ways. Starbucks’ loyalty program is entirely mobile, which speaks to their tech priorities and innovation. However, their loyalty program isn’t just about stamping a card and getting a free coffee; they have implemented gamification to increase their sales and utility of their loyalty program.

Gamification uses concepts like points and rewards to change the way that customers make purchases and interact with their company. Starbucks’ loyalty program incorporates gamification within their loyalty program to allow frequent customers to get free drinks, food items, shots of espresso, and even pumps of syrup.

Independent coffee shops can learn from this loyalty program in order to compete and reward loyal customers. Advanced tech gamification can be difficult to implement for smaller establishments, but advanced loyalty programs that offer perks and rewards beyond just a free cup of coffee can still help to encourage customers to come back and utilize their rewards.

Hand holding a program loyalty card

Your loyalty program can include:

  • Bonuses for referring a new customer.
  • Access to free or exclusive merchandise.
  • A membership card.

Doing Something Special

Starbucks has always been great at doing something special and offering something that other establishments don’t. Their variety of drinks, food, music, and merchandise has aided them in their takeover of the coffee industry. They are great at branding, creating a comfortable environment for customers, and even marketing holiday cups that look different than everyone else's. For independent coffee shops, doing something special is what helps them gain customers from Starbucks and other local competition.

Cat cafe in Tokyo Japan

Doing something special can mean so many different things. Cat cafes have allowed local coffee shops to double as a cat-lover haven. Other coffee shops offer unique products, like specialty decaf beverages or lactose-free milk. Some utilize latte art; others teach workshops; some host live music; and some just offer a great atmosphere. Local coffee shops are great at offering something special, which is a nice reprieve from the typical Starbucks experience you can have anywhere else.

Final Thoughts

One independent coffee shop is probably not going to make a run at the coffee juggernaut that is Starbucks. However, the independent coffee niche is a force to be reckoned with. Not only do local shops have to focus on quality, they also have the perk of being a local establishment that sits close to many coffee lovers’ hearts.

Local coffee shops can utilize the technology and loyalty programs in their own shops that have proven to be successful for Starbucks. Whereas most Starbucks locations look identical, local shops can create something special and unique that Starbucks doesn’t have.

Independent coffee shops can compete in their own way by offering their customers something they can’t get anywhere else. Your local coffee shop may not be on every corner or as familiar as Starbucks, but that is what makes them special.

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