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Starbucks goals for sustainability will require significant consumer buy in

UnknownStarbucks has an ambitious plan to reduce its environmental footprint, albeit one it acknowledges will require considerable buy-in from its customers.

The Seattle-based coffee chain committed to three preliminary targets for 2030, including cutting by half its carbon emissions from direct operations and its supply chain, the waste it sends to landfills and water used in direct operations and coffee production.

Corporate environmental commitments such as these often require consumers to change their behaviours, experts say, which is possible with the right incentives, but need to steer clear of the appearance of self-interest.

“We are committed to making our materials compostable and recyclable, but we know that ultimately, we need to enable consumers everywhere to move to reusable cups and utensils,” said Rebecca Zimmer, director of global responsibility at Starbucks, in an email.

Starbucks is the latest large company to announce lofty environmental goals. Several airlines recently turned to carbon offsets, which invest in projects to compensate for their emissions output, and Maple Leaf Foods claimed in November that it is now carbon neutral.

An assessment on Starbucks’s operations found that it emitted 16 million tonnes of greenhouse gases, withdrew one billion cubic metres of water and emitted 868 kilotonnes of waste across its full value chain in 2018.

Its mitigation strategies include expanding its plant-based options to migrate toward a more environmentally friendly menu and shifting from single-use to reusable packaging.

One potential option is to sway people away from cow’s milk toward plant-based alternatives such as nut and oat milks, said Zimmer, in an interview. Dairy is responsible for 21% of the company’s global carbon footprint, according to a company report, edging out coffee and waste for the top spot.

Oat milk, in particular, seems to have a better environmental footprint, she said. Starbucks offers oat milk at some U.S. locations as a test, but has not yet made it available at any of its roughly 1,600 Canadian stores.

The company also aspires to have the majority of its customers arrive with mugs and cutlery in hand rather than rely on takeaway cups and disposable utensils, she said.

Just how the company will achieve those goals remains unknown and Starbucks will spend the year conducting market research and trials to determine specific plans.

It’s not easy to change ingrained behaviour, said Katherine White, a professor at the University of British Columbia’s Sauder School of Business.

“The big problem is usually that people just forget,” when it comes to bringing a coffee tumbler from home, she said, but with the right motivation it’s possible to teach people to form new habits.

One strategy is to offer rewards or punishments. Many grocery stores, for example, charge a fee for plastic bags. Starbucks, meanwhile, discounts drinks by 10 cents if customers bring their own cup.

The size of these incentives or fees matters, said White, adding five and 10 cents does little to change consumer behaviour.

A punishment could prompt backlash, she said, but Starbucks could offer a more substantial reward, such as an entry into a draw for free coffee for a month.

It’s not unreasonable to ask consumers to bring in mugs or consider oat milk, but it’s more serious if Starbucks commits to changing the economics of that proposition “in a really substantial way for consumers,” said Sarah Kaplan, a professor at the University of Toronto’s Rotman School of Management.

“If they made it so it was really substantially meaningful that would actually drive consumer behaviour,” she said.

Starbucks could charge consumers more for cow’s milk rather than an upcharge for dairy alternatives, she said.

“You want it to not … look just completely self-interested,” she added, noting Starbucks will likely be selling lots of reusable mugs in store.

While Starbucks has yet to determine just how it will get consumers on board with its vision, Zimmer thinks its future vision is possible.

“If I think broadly into the future, I do believe that as a society we’re going to be making choices that are better for the planet, and so I do see pretty significant shifts: the way we live, the way we consume and the way we basically lead our daily lives.”

 


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Starbucks to open pick up focused Toronto spot as eateries revamp for ‘this new digital age’

Screen Shot 2020-01-16 at 4.46.53 PMCustomers accustomed to hunkering down for hours to work or socialize won’t be able to do so at the newest Starbucks format that lacks seating and encourages people to grab their drinks and go.

Starbucks Canada announced Tuesday it will open what it calls a pickup store in downtown Toronto’s underground pedestrian complex, the PATH.

The move is part of a trend in which companies are experimenting with take-out only locations as restaurants tackle how to best serve customers who increasingly demand online ordering and delivery.

“Everybody is trying to figure out what’s the next great or what’s the appropriate store format in this new digital age,” said Vince Sgabellone, a food service industry analyst with market-research firm NPD Group.

The rise of food-delivery apps in Canada, including UberEats, Foodora and DoorDash, has accustomed consumers to feeding almost any whim on demand and prompted a rethink of traditional eatery formats as people showed a preference for eating at home.

“Digital is changing the landscape: how people order, how people interact with their food-service brands. It’s all changing, and all the operators are trying to figure out, ‘OK, what’s best for my customers?”’ said Sgabellone.

The less than 93-square-metre (or 1,000-sq.-ft.) location is smaller than most Starbucks stores. It caters to customers who order ahead on the company’s mobile app and grab their beverage in store.

Customers can still order and pay in person, a company spokeswoman said in an email, “but this is not the optimal experience for this store.” However, that method allows consumers who want to bring a reusable cup for their drink to do so.

The company piloted the concept in Seattle, and opened the first location in New York City in November. Toronto’s Commerce Court spot is slated to open Feb. 4.

This new format “is designed to modernize and reimagine the customer experience in high-traffic, urban areas,” wrote Michael Conway, president of Starbucks Canada, in an email.

The company has no specific plans to expand pickup stores in Canada, but this format “is designed for high-traffic urban areas,” he said.

Other restaurants, mainly in the U.S., have also dabbled with this concept.

Chick-fil-A, which recently opened its second Canadian location, started testing two stores without a dining room or drive-thru in Nashville and Louisville in October 2018. These spots are dedicated to the company’s catering and delivery business.

“Starbucks seems to be a perfect candidate for doing something like this,” said Joel Gregoire, associate director for Mintel Canada’s food and drinks reports.

In addition to coffee, Starbucks can also be considered a tech company, he said, pointing to its investment into the customer’s digital experience.

The company introduced its mobile app in 2010 and gave customers the ability to order online for in-store pick up in October 2015.

That has given their customers time to get accustomed to ordering coffee digitally, said Gregoire.

Starbucks said it couldn’t share specifics as to what percentage of its sales come from digital ordering in Canada, but Conway said the company is “seeing healthy growth” from active loyalty program members with the mobile order and pay option.

For these customers, “it really doesn’t require much of a leap” to shift to the new location, said Gregoire.

In addition to happier customers, there’s financial incentive for the company too.

Sky-high rental rates in Canada’s major cities pose problems for eateries.

In recent years, ghost kitchens cropped up in Canada. These operations cook meals only for delivery – with no dining rooms or takeout options.

Meanwhile, some coffeeshop owners got creative with space in order to be able to afford to operate in Toronto and Vancouver. Several tiny coffeeshops opened up in the cities, many with just a takeout window.

One of the business benefits for Starbucks is the lower cost associated with a smaller footprint, said a company spokeswoman.

“The cost of property is exceptionally high,” said Gregoire of the commercial real estate markets in Toronto and Vancouver.

“If you can take steps to limit your footprint but still deliver a good quality meal… it probably helps you make a profit because you’re not paying for that dining space.”