The Frappuccino Funk: What’s Ailing Starbucks?

A Starbucks sign hangs from a building
Listen

When a ubiquitous popular brand loses its way, the reasons can be complicated, and the fixes formidable. 

In the case of Starbucks, which has been plagued by bad news lately as its sales have dipped four quarters in a row, the fixes may not be so complex. In fact, one may be tempted to say they amount to comfortable couches, Sharpie markers, and a condiment bar. 

“The primary problem I see is their operations have gotten far removed from their original value proposition,” says Gina O’Connor, professor of entrepreneurship at Babson and the Fischer Family Term Chair in Healthcare Management. 

That original value proposition was based less on coffee and more on the cozy, welcoming vibe in the café. “It was a place to commune,” O’Connor says. “In the beginning, many people didn’t love the taste of the coffee but really appreciated the atmosphere.” 

Faced with changing leadership and an inability to readjust after the calamity of the pandemic, Starbucks seemingly has lost touch with the core of its identity. Its cafés have become, not so much homey places to hang out, but nondescript spaces with reduced seating where people wait in long lines to pick up orders from stressed-out baristas. “You order online and leave,” O’Connor says. 

O’Connor is an expert on innovation, particularly breakthrough innovation that can change the dynamics of a market. While O’Connor believes that Starbucks could experiment with innovation in its cafés, say by trying out new efficient ordering systems, its issues feel much more basic. “They have less to do with innovation and more to do with execution and forgetting why customers were so happy with them,” she said. 

Last year, Starbucks hired Brian Niccol, formerly of Chipotle, as CEO to right its caffeinated ship. He has implemented a plan he calls “Back to Starbucks,” and the company’s recent Super Bowl ad, titled “Hello Again,” promises that “the Starbucks you love is ready.” O’Connor reflects on these efforts and offers her thoughts on how the coffee giant lost its way and how it can find its way back. 

What Went Astray 

Gina O’Connor
Gina O’Connor, professor of entrepreneurship, says that Starbucks has lost touch with a defining part of its identity, which was offering cozy and welcoming cafés to customers.

Perhaps saying that Starbucks can solve its problems simply by adding some cozy couches is a bit simplistic. Then again, its issues probably feel obvious if one has spent time in its cafés. 

Take the detailed, time-consuming customizations that customers often ask for with their orders. Three pumps of that flavor and a pump of that one, they may say, with a shot of espresso and whipped cream. “Whatever you want, you get it, but it takes a long time,” O’Connor says. “It turned into all these long lines of people waiting and the rest of us who aren’t willing to wait anymore.” 

Adding to the problem was the fact that, during the pandemic, Starbucks took away its condiment bar, which meant that baristas had to add milk and sugar, things the customer could do themselves. “You have to ask for it, and that holds up the line more,” O’Connor says. 

Because the baristas are so pressed to fill complicated orders, they have less time to interact with customers, to make small talk or write a greeting on a coffee cup with a Sharpie marker. Those simple gestures were one of the crucial things that gave Starbucks its homey atmosphere. 

Without that warm ambiance, Starbucks loses a key differentiator as its prices have gone up and as it faces an increasingly competitive coffee marketplace. “The high prices may not have been a problem if they kept the communal part there,” O’Connor says. “You pay double what you would for a cup of coffee. You can just go to McDonald’s and get Newman’s Own coffee.” 

Staging a Turnaround 

As the years have passed, Starbucks feels further removed from Howard Schultz’s vision for the company as a “third place” between work and home. While not the founder of Starbucks, Schultz was a consequential entrepreneurial leader who built the company into the coffee behemoth it has become. 

“As you change from the founder to the second and third generational leaders, you lose the sense of the entrepreneurial vision,” O’Connor says. 

Realizing that the vision has been lost can take time. When a company experiences a bumpy patch, its leaders may be slow to realize the root causes. “It can take a while,” O’Connor says. “People think it’s the economy. It’s inflation. It’s this. It’s that.” 


“The primary problem I see is their operations have gotten far removed from their original value proposition.”
Gina O’Connor, professor of entrepreneurship and the Fischer Family Term Chair in Healthcare Management

If she were running Starbucks, O’Connor says, she would conduct market research to understand just how important a comfortable atmosphere is to customers. She also would look hard at the operations of cafés and the relationship between baristas and customers. Starbucks was once known as a company that empowered employees and gave them strong benefits, a commitment that seems to have faded. O’Connor would want to fix that. “It can still be a culture where you feel valued and feel cared for,” she says. 

For its part, Starbucks is taking measures to address its problems. The company recently brought back the condiment bar, for instance, and began offering free refills to customers who stay at the café to drink their order. O’Connor says the company is well-positioned to stage a turnaround. “They are not at an alarmist level,” she says. “They have time. They have a great brand. They have great locations.” 

Posted in Insights

More from Insights »

Latest Stories

Farrah Narkiewicz and Rob Major sit and talk at Trim Dining Hall
The Regular Crowd Shuffles In: Lunchtime at Trim  Trim Dining Hall may be a key part of everyday life for many Babson students, but a slew of faculty and staff members also make it part of their daily routine. At lunchtime, they file into the dining hall, seeking food and camaraderie.
By
John Crawford
Senior Journalist
John Crawford
A writer for Babson Thought & Action and the Babson Magazine, John Crawford has been telling the College’s entrepreneurial story for more than 15 years. Assignments for Babson have taken him from Rwanda to El Salvador, from the sweet-smelling factory of a Pennsylvania candy maker, to the stately Atlanta headquarters of an NFL owner, to the bustling office of a New York City fashion designer. Beyond his work for Babson, he has written articles and essays for The Philadelphia Inquirer, Notre Dame Magazine, The Good Men Project, and other publications. He can be found on Twitter, @crawfordwriter, where he tweets about climate change.
September 4, 2025

Posted in Community

Babson Study Reveals the Power of Customer Kindness New Babson-funded research shows that customer kindness can boost employee satisfaction, reduce turnover, and spark a cycle of positivity in service industries.
By
Hillary Chabot
Writer
Hillary Chabot
Hillary Chabot is a writer for Babson Thought & Action and Babson Magazine. An award-winning journalist, she is known for her insightful reporting and dedication to detailed storytelling. With a career spanning over two decades, she has covered a wide range of topics, from presidential campaigns and government policy to neighborhood issues and investigative series. As a reporter for The Boston Herald, Hillary earned a reputation for tenacity and integrity. Her work at Babson College fuels her passions—to learn something new every day and conduct thoughtful, empathic interviews. She’s thrilled to be at Babson College, where students, faculty, staff members and classes provide compelling copy daily.
September 3, 2025

Posted in Community, Insights

Three photos in a side-by-side collage depict Michael Kopelman coaching, Brady Anderson in action, and the doubles team celebrating
Courting Success: How Babson Tennis Teams Transformed into National Powerhouses With championships and top-tier recruiting classes, Babson Director of Tennis Michael Kopelman has overseen the transformation of the men’s and women’s programs into national powerhouses.
By
Scott Dietz
Writer
Scott Dietz
Scott Dietz is Babson College's Associate Athletic Director for Strategic Communications. Dietz is responsible for the department's internal and external communications, including branding, campus engagement, marketing, social media, sponsorships and website management. Additional duties consist of event coverage, facilitation of interview requests, media pitching, video content, writing and editing. Before Babson, Dietz spent 13-plus years at fellow NEWMAC institution Wheaton College, worked for the NFL, New England Patriots, and in the media relations department with the NBA's Cleveland Cavaliers. A native of South Park, PA, Dietz began his sports information career at Westminster College.
September 2, 2025

Posted in Community