Starbucks To Buy Fancy Coffee Machine Maker, Add Reward Program

Things are still changing at Starbucks. First off, they’re going to buy the maker of “Clover” the crazy $11,000 coffee machine that makes one cup at a time.

Starbucks, the world’s largest chain of coffee shops, also said today it would acquire Coffee Equipment Co., the maker of the $11,000 Clover machines that brew one cup of coffee at a time. Financial terms weren’t disclosed.

“You have an economy that really is in a tailspin, and many would say the consumer is in a recession,” Schultz told more than 6,000 shareholders at the company’s annual meeting in Seattle. “We are dealing with things that we haven’t seen before in terms of how people are responding to how tough it is.”

Secondly, they’ve announced a rewards program:

Customers will be able to get free syrup or milk alternatives for their drinks, or free refills on brewed coffee, if they use their Starbucks card.

“Register your card and we will customize your beverage basically for free,” Schultz said.

Does the idea of a rewards program appeal to you? Or no?

Starbucks Chief Doesn’t See U.S. Economy Improving (Update2) [Bloomberg]
(Photo:Ben Popken)

Comments

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  1. B says:

    A coffee machine maker, that would be something that makes coffee machines?

  2. levenhopper says:

    Since I don’t go to Starbucks, I’d say the rewards program doesn’t appeal to me…

  3. spamtasticus says:

    I did the math a long time ago. Betewen my wife and I we spent $1400 a year on starbucks coffee. That was an averate of 1 per day per person. I then bought a high end espresso machine, a great grinder and eventually even a roaster. I brew the coffee for my wife and I every morning and let me tell you, it costs me 1/10th of what it use to and is leaps and bounds above the quality of starbucks. It took making my own coffee for me to realize just how over roasted starbucks coffee is. That is how they keep it tasting the same at all stores. Furthermore, I learned that starbucks is the largest Milk buyer and Milk seller in the world. All their proffit is in the milk. If everyone went in and bought american coffee they would go out of business. My suggestion is buy a good espresso machine, a nice grinder and roll your own. And if you fall inlove with it like I did, buy a roaster and just buy green coffee at a fraction of the cost and find out just how good coffee can really be. The only way I can describe it is the difference between freshly squeezed OJ and 100% real but out of a carton OJ.

  4. B says:

    How exactly is buying $11,000 coffee makers a valid response to being in a possible recession? Also, I read the Slate article on that coffee maker, and it sounded to me that the point of the machine was it allows very minute adjustments in the coffee making process, from the water temperature to the exact amount of time it’s brewed. I’m not sure the Starbucks employees, who recently had to be trained in how to push the buttons for their espressos, can handle this kind of complexity.

  5. arch05 says:

    @levenhopper: Just had to put your smug 2 cents in, didn’t you? I’d like the rewards thing if you didn’t have to get their credit card.

  6. lpranal says:

    They better do something to make their stuff cheaper. Pretty much every “how to cut costs” article re-written / copied on every single blog out there has at least one line with something to the effect of “stop buying expensive starbucks”.

  7. Shannon says:

    $11,000.00 to make 1 cup of coffee…… some how that doesn’t sit right with me. How big is this thing? Does it have like ESP or something?…..(still pondering)…… Oh I GET IT I GET IT, this means instead of your “tall” or “grande” sized drink being $3.80 or $4.20 it’ll be more like, $4.80 & $5.20… just to pay off this pointless machine. Good job Ace!

  8. bohemian says:

    I would be up for a real rewards card. The kind where they punch the card for each purchase and then you get the 10th coffee free. The starbucks kiosks in Hyvee stores did this for a while.

    I’m still not understanding the purchase of Clover.

  9. @Shannon:

    I think the purpose of the machines is to increase customers. If Barista’s don’t have to make each cup of coffee individually they will have quicker lines. But that’s just a guess.

    The purpose of the card is clearly to gain sales through databases.

  10. AMetamorphosis says:

    “Register your card and we will customize your beverage basically for free,” Schultz said.

    Oooooohh … they wil put milk or sugar in it … and schmucks will keep paying 4:00 for a cup of it … thats the reward …

  11. B says:

    Here is what the 11,000 coffee maker is about:
    [www.slate.com]

  12. kjherron says:

    Hmm, I’ll bet they’re thinking about vending machines or self-serve kiosks.

  13. trickonion says:

    @B:

    I want to make a vending machine that sells vending machines. It’d have to be really fucking big.

  14. Dillenger69 says:

    My first thought was that they would install some kind of spiffy fabrication unit in stores to make you a coffee machine right there. It’s too bad they are only buying a company that makes coffee machines one or two people in each city can afford to buy.

  15. KJones says:

    Would you go back to a restaurant chain that was advertising new spices and salt shakers but still served lousy steaks?

    They lost my business because they were cutting back on how much coffee was in their coffee (and lying about it), as well as being unable to get orders right. They have done nothing to regain my business.

  16. ChuckECheese says:

    @bohemian: SB bought Clover because the rich among us are not in a recession. You can still make money off of $11000 coffee machines, but not so much off $2 (or $3 or $4) coffees. At least that’s how it’s supposed to work. I’ve always suspected that there’s plenty of money to be made on the low end of many markets, but people’s snobbery and the stock market’s need for ever-increasing value have turned business off to such ideas.

  17. ludwigk says:

    @B: It’s like the simpson’s episode where Marge sees the Breadmaker maker, which spits out a little machine, which spits out a loaf of bread.

  18. emona says:

    I don’t go to Starbucks now because they’re too expensive. I can imagine a $11K machine will only raise the price more. Free upgrades won’t seduce me back, either: I drink soy milk cappachinos with zero syrups and frills. Lower your rediculous costs, and I’ll start going again.

  19. oakie says:

    @spamtasticus: so how many cups of coffee do you have to drink to recoup the cost of all the machinery?

  20. trujunglist says:

    @spamtasticus:

    Donald Duck OJ, which would be the ghetto 24 Hour Liquor and Coffee Shop in this analogy, easily trumps any 100% fresh squeezed OJ any day.

  21. oakie says:

    @AbstractConcept: it’s even faster when they make it by the jug and pour them rather than have to brew each and every cup of drip.

  22. oakie says:

    i get the feeling that they’re planning to resell the machines, not ruin coffee with it.

  23. morganlh85 says:

    The fancy coffeemaker is akin to using a French press to make your coffee. It will be fresher since it’s made immediately.

  24. Super_Kitten says:

    @spamtasticus: + others:

    I was never addicted to Starbucks because I pretty much always knew how crappy their coffee is. I DO NOT understand why people love their coffee and think it is great (except that they do not know what coffee is actually supposed to taste like, and instead like Starbucks’ custom syrups, powders and other such flavorings which mask the crappy coffee).

    I, like spamtasticus, roast, grind, and brew my own coffee in my espresso machine or french press, and it’s about a majillion miles away from Starbucks. Get a damn french press people! Cheap and great.

    Also, my local coffee place (I live in L.A.) named Intelligentsia has 2 Clover machines. They do require attention from baristas, actually. There is a reason why they cost so much. At Intelligentsia they brew a few coffees in them, and each is a different price, usually around $2-$6 a cup.

    I hate how Starbucks ruined barista culture and true coffee and cafe culture by using automated machines. The Clover is a substantial improvement over their current crap machines. The “baristas” at Starbucks do very little in the way of making drinks (except for adding all that flavoring crap I mentioned earlier).

  25. Orngbliss says:

    I am just wondering if the point to this “miracle” coffee machine is that Starbucks won’t have to spend as much money on employees, because this machine will take the place of what an employee would do. Thereby, lowering the cost of coffee…..

    Wishful thinking…

  26. Coles_Law says:

    To clarify, i’m pretty sure Starbucks bought the company that makes the machines. I don’t think they’re putting them in their stores.

  27. Techguy1138 says:

    It seems like they are buying the COMPANY that makes these expensive machines. These machines aren’t meant for private individuals. At 11k these are business machines.

    Likely they are going to require all the stores to have these machines on hand. It was cheaper to buy the company to stock all of their stores globally they just buy the machines with a markup.

    This should help increase the quality of the coffee. It looks like they are trying to combat customer attrition by offering a better quality product and giving extra service for free.

    @KJones:

    This seems to be a case where the steakhouse is offering better steaks to get people in the door.

  28. WraithSama says:

    An IT guy at my old job was an immigrant from Columbia, the fabled Land of Coffee. He thinks most American coffees, *especially* Starbucks, tastes like crap.

    He imports his coffee from Columbia and offered me a cup once. One taste convinced me that Americans truly don’t know what good coffee is.

  29. Claystil says:

    I saw a program once, I think it was that stupid modern marvels show, but they interviewed coffee growers, chemists (in the coffee industry), and a variety of other people all of whom said the french press is the best way to brew coffee for the purposes of preserving flavor providing oils. How could an $11,000 machine possibly improve a method that’s “the best” and costs a few dollars (and almost $0 to maintain)? The french press is pretty easy to use, too. Maybe not as efficient this machine, but is efficiency worth $11,000?

  30. spamtasticus says:

    @oakie:

    Espresso Maker: [www.crateandbarrel.com] $400

    Bur Grinder: [www.williams-sonoma.com] $100

    Roaster: [www.sweetmarias.com] $190

    The math I did was (conservative) 5 lattes @ $3.75 each per week for my wife and I at Starbucks. That is $1950 per year.

    Now it is $690 for equipment. I estimated about 75c per cup in milk, sugar, coffee per cup (I drink 20oz lattes). That is $1080 for the first year and $390 each year after that. And this does not take into account that I dont have to drive to Starbucks, wait in line and I get 100 times better coffee.

  31. BugMeNot2 says:

    @Super_Kitten:
    “they do not know what coffee is actually supposed to taste like”
    Bah. Few today know what coffee is supposed to taste like. They’ve turned it into a damn culture, just like they did with beer and wine.
    Coffee is supposed to taste like the bitter tears of an old salt who’s just realized his life on the open sea has come to an end, or the sweat of the farmer who’s poured his life, his blood, his being into the farm, only to raise dust and cracked sod.
    Coffee’s supposed to be bitter, harsh and open your eyes while curling your nose hair.

  32. Claystil says:

    @BugMeNot2: the ultimate goal, for me, is to make coffee that sticks the bitterness to my tongue for as long as possible. medium roasts seem to work best.

  33. JustIcedCoffee says:

    The Clover or “Fresh Press” SB likes to call it is pretty sweet, I tried it out last week here in seattle.
    It’s great because there’s face time with the barista, you can decide what kind of coffee (granted the SB variety is not the best), it’s ground up in front of you, and you can specify an exact temp.
    $11,000 is not too out of line with what an esspresso machine cost… It’s cheaper than a latte (2.50 for a tall)
    Don’t get it twisted, it is essentially a frech press, but mechanized to make it possible to do large volumes – Very cool to watch -

  34. ChuckECheese says:

    @spamtasticus: You should submit your coffee program to [www.economiesioftherichandfamous.com]

  35. Amelie says:

    Every fast food joint and bakery in Germany has a machine that makes one cup at a time. One does not have to pay $11,000 for an excellent coffee or a cappucinos.

  36. AnnieGetYourFun says:

    We have a machine at work that brews one cup at a time, and I lurve it. It’s labeled Starbucks, but no idea who the actual manufacturer is. What, you want me to haul my fat ass up and walk to the kitchen to find out? Fuck no.

  37. AnnieGetYourFun says:

    When did all of your Europeans show up? Gads.

  38. Amelie says:

    @spamtasticus: If I may ask, do you recommend the “Bur”grinder.

  39. ChuckECheese says:

    @Amelie and @AnnieGetYourFun: Are the machines of which you speak those nasty pod machines that make weak flat coffee served at about the temperature of bathwater?

  40. gmss0205 says:

    So if I understand this correctly – you buy a $25 Starbucks card, they have all of your money upfront, and then they will give you a free “drip” refill that probably costs them next to nothing. The whole time they are sitting on your money, earning interest on it. Interesting.

  41. lonewolf333 says:

    I think most people go to starbucks for the status. Why else would someone pay good money for nasty coffee. All coffee is nasty BTW.

  42. MYarms says:

    Starbucks is garbage and anybody who drinks their coffee should be ashamed.

  43. BalknChain says:

    @WraithSama: Jamaican Blue Mountain coffee while actually in Jamaica. Sounds sily to say while in Jamaica, but I purchased some Jamaican coffee online and it was NOT the same. *sigh* We do not know what good coffee is without traveling. Best I’ve ever had. It is sinfully delicious black, it needs nothing. To add to it is to ruin it. I’ll leave my true feelings about Starbucks over on Gawker since I was quite mean and colorful.

  44. BalknChain says:

    ugh, “silly”

  45. duncanatrix says:

    I work at Starbucks, so I am really getting a kick out of some of these replies…

    Actually, to my knowledge, the “Starbucks card” in question is a gift card. You register it online, an option available now to prevent loss, and that acts as your frequent buyer card. (I’ve been talking to several of our regulars who feel that a punch card–buy 10 get one free type of deal–would be a huge incentive to retain customers.) You wouldn’t have to sign up for a credit card, as someone suggested.

    On top of that, you’d be surprised how much you save just by ordering the drink as is. It’s extra for soy or organic milk, additional shots, syrup, and coffee refills are $.50; however, since we’re phasing out organic milk, this alienates a whole consumer base. If you’re one of the folks who gets a triple soy latte with 3 different flavors in it, you’re essentially saving $1.50 on your coffee.

    For those of you planning to get your own machine instead of buying from Starbucks, remember: (1) use a burr grinder–it grinds evenly and prevents you from having tiny molecules of coffee in the same batch as chunks of bean, and (2) avoid machines that you add water to that heats up and makes steam; the pressure’s all off and there’s no temperature control. These might cost you more in the long run, but will make your coffee LOADS better if you make it correctly. For an initial investment of $500-600, you can do it yourself pretty easily for a long time.

  46. BugMeNot2 says:

    @Claystil:

    Aye, I would say you know how to drink coffee.

  47. fuzzymuffins says:

    you pay $3.75+ for a beverage that’s pennies to make at home… why? as ‘spamtasticus’ pointed out….. MILK. you drink more milk that you do coffee.

    milk aside, you pay for ego, status and ‘conversation’. your ego gets a boost just ordering a coffee in a foreign language. you feel connected because you are participating in an event of the masses, getting coffee that a million other people tell you is ‘all the rage’…. you pay extra for the ‘privilege’ of being a starbucks patron.

    here’s why i make my own coffee in the morning:

    to me, there’s nothing sexier in the morning than kissing my girlfriend, who’s still asleep in bed as i head out for work…. she rolls over half awake asking me “did you make the coffee?”… mmmmmm

  48. spamtasticus says:

    @Amelie:

    Only if its cold outside.

  49. Michael Belisle says:

    I hope this means that the precision-brewed future of coffee is coming home. The closest Clover to me is 100 miles away (which is the only clover for another 500 miles).

    The NY Times did a slightly confusing story on the clover and some other $20k coffeemaker.

    (Also, I’m not sure I would call it a mechanized French Press or even compare them. It’s about $10,970 more elaborate than that.)

  50. Michael Belisle says:

    Oh yeah, the best quote from the NY Times article, about the other machine:

    “If you just want equipment you’re not ready,” Mr. Egami said in an interview. But, he added, James Freeman, the owner of the cafe, is different: “He’s invested time. He’s invested interest. He is ready. [www.nytimes.com]

  51. chiieddy says:

    @arch05: It’s not a credit card it’s a reloadable pre-paid card (like a gift card).

  52. Claystil says:

    I had no idea this thing was a like a super controllable french press. pretty awesome.

  53. The Clover is actually a cool machine though reliablity seems to be an issue I have been told at the local coffee shop.

    If you want the “Clover experience” at home, try this:

    [www.instructables.com]

  54. @Michael Belisle: It’s basicaly an inverted French Press, see the link above for how to “replicate” it at home ;)

  55. datapants says:

    Starbucks made a very shrewd move by buying the company responsible for the Clover. Over the past couple years, I’ve enjoyed many cups from a Clover at a neighborhood cafe, and it’s the only coffee I can drink without adding anything. This is a big win for everyone. We as customers get whatever kind of coffee we want, brewed fresh for us on the spot, and the cafe eliminates the waste caused by coffee going stale in air pots (which should quickly add up to more than $11K in savings). Don’t be surprised if Starbucks starts adding some amazing, crazy expensive roasts to their in-store lineup because of this.

  56. crazylady says:

    @AbstractConcept: clovers make one cup of coffee at a time. like another poster above, i frequent intelligentsia and they have a couple of clovers that clearly require a lot more attention than the trash called “coffee” served at starbucks. although tbh i don’t think even if starbucks did add these machines to their stores that would change much.

  57. Me. says:

    Now wait… it is really the rechargeable gift-card or is it their SBux Duetto Visa?

    To answer the original question, I would totally use it if it is the gift-card (no way if it is their credit card). I’m not too cool to admit that I drink Sbux… and when I’m by a mom n pop shop, I ‘ll drink that too.

  58. Michael Belisle says:

    I take back what I said about Starbucks bringing the future to my doorstep. There’s just not enough excellence to roast it by the ton.

    Even Starbucks’ “Black Apron Exclusives” beans aren’t held to the standards that most Clover-using cafés have. This makes Starbucks’ use of the Clover a bit like playing AM talk radio through a $30,000 sound system. What’s the point? [theshot.coffeeratings.com]

    You beat me to it, crazylady.

    @Snowrunner: I hope that’s a joke. It’s like adding a racing stripe to your Pinto and saying it’s just like the cars at Le Mans. (Physically, pressing up is the same as pressing down. Why not avoid the overextraction problem by offloading the excess output to a thermal container? Bonus: it stays warm for hours.)

  59. groverexploder says:

    I’d just put the machine Starbucks stores in several key areas with a high concentration of wealth and coffee drinkers – New York comes to mind.

    Make some promotional materials available and watch the uber-yuppy dollars roll in.

  60. jesseraub says:

    STARBUCKS PURCHSED THE COMPANY THAT MAKES THE MACHINE, not the machine itself. Super rare chance that any Starbucks will have a Clover.

    The Starbucks Verismo espresso machines already cost $10,000.

    It still gets me that people don’t understand the basic difference between espresso and coffee.

    “Starbucks is so expensive! I can make it at my house for pennies!”

    No you can’t. Because you’d have to have an espresso machine. Starbucks lattes cost just as much as any other coffee shop. Their fancy drinks are overpriced. Drip coffee is extremely comparable.

  61. Finder says:

    @Super_Kitten: Glad you’re enjoying the first Intelligentsia outside of Chicago. You know what we’ve known for years. ;)

  62. theysaidwhat says:

    The rewards program is loooooong overdue. However, they need to make the card work in ALL starbucks locations (airports, supermarkets, barnes &noble, etc.) rather than only in their stand-alone stores. I gave up on the card as soon as I realized I could use it, well, basically nowhere. When I am coming off a flight, juggling a laptop, a rolling suitcase, a purse (that I probably just had to retrieve from my rollalong suitcase-thanks Delta!), my cellphone/blackberry to catch up on what I missed in-flight and directions to wherever I am going, nothing pisses me off more than to be told that the goddamned card I’ve just carefully retrieved ‘can’t be accepted in that location’.

  63. theysaidwhat says:

    @jesseraub: plenty of us have espresso machines at home

  64. theysaidwhat says:

    @jesseraub: plenty of us have an espresso machine at home.

  65. jeff303 says:

    @B: Exactly! Kind of like “ATM machine” LOL

  66. MissTic says:

    Didn’t Starbucks just post some disappointing financials? I guess they are hoping this will drum up business.

  67. LVP says:

    With the right knowledge, equipment and beans you can make an even better espresso drink yourself at home.

  68. datapants says:

    I for one welcome our brushed steel, coffee-brewing overlords. Many places I travel just don’t sell much coffee through the day, so I often wind up with coffee from an air pot that is just about to be pitched. I guess I could order an Americano instead, but I keep stubbornly rolling the dice with their house coffee. Bringing in Clover coffee (which I enjoy often in the PNW) would be a big step up, provided the beans are worthy. As for the cost to equip the cafes with a Clover, Starbucks won’t be paying anything close to the retail price once they own the manufacturer. Starbucks could also save money on coffee when they’re able to stop pitching air pots of unsold coffee every couple hours.

    It’s also likely that Starbucks will help CEC complete their rumored “home Clover” model and tap into a juicy revenue stream when that product can be ordered from any Starbucks location.

  69. pauljunk says:

    It’s a shame that they bought out clover. The machine is amazing. Now you will only be able to drink tasteless burnt beans from the machine.

  70. KJones says:

    @Techguy1138: This seems to be a case where the steakhouse is offering better steaks to get people in the door.

    You have mistaken sizzle for steak.