Starbucks Makes Their Coffee More Expensive...

In Today’s (9th) Edition of “Element, by Arsh“ -

• Starbucks Plan To Reinvest Itself (& Make Coffee More Expensive)…

• Netflix’s Monster Earnings Report…

COFFEE & STARBUCKS

Starbucks Is Changing & It Matters More Than People Think…

A New CEO. Starbucks recently got a new CEO, Brian Niccol, and from the day he started working, he has been incredibly focused on his plan to bring back the coffee chain to its glory. He realizes that over the years, Starbucks has become just another place where people go get their coffee. Additional pressures from different areas have made Starbucks lose its charm. Brian wants Starbucks to become that place again where people get the premium experience they are paying for.

What’s Happening? Over the years, the competition for Starbucks has only increased, especially from other coffee chains like Dunkin’, the rising tide of specialty coffee, and customers preferring to visit independent coffee shops to Starbucks (primarily in the U.S.). This, according to Brian Niccol, happened because Starbucks had started to focus on serving every customer. If you have ever seen someone talk about a business, you may recall that every business tries to optimize its offerings for its target audience. Starbucks tried to appeal to every type of customer and lost the business of their most “valuable“ customers.

The Change. Starbucks’ most valuable customers are people who come to their store for the experience, and not just coffee. This might seem counterintuitive, but this is the foundation on which the company has been built. The company is trying to bring that customer back by not offering discounts. Yes, they want people who are visiting Starbucks for just their discounts, to not come to the store. While prices are not increasing at Starbucks, the discounts that you could see on the application would probably just be few and far between now. Let me know what you think of this decision…

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NETFLIX

Netflix Reports Incredible Results From Last Quarter…

The Earnings Report. Every 3 months or so, every publically listed company releases its quarterly results. Earlier this week, the content powerhouse - Netflix reported theirs. It was a report that not a lot of people were expecting. The company reported the following numbers -

Revenue → $9.83 Billion (Reported) vs. $9.77 Billion (Expected)

Earnings Per Share (EPS) → $5.40 (Reported) vs. $5.12 (Expected)

These are incredible numbers for a company people think has “matured“ and its growth might be slowing down. Wait. So, what’s working for Netflix?

The Ads Business. For the longest time, Netflix’s management has been opposed to an ad-supported subscription, but a few years ago, they really went in. And I can assure you that this decision was one of the best the company has taken in a long time. Before an ad-supported tier was introduced, Netflix decided to crack down on password sharing, and there was rising sentiment that Netflix’s prices were getting out of hand which would have motivated people to discontinue their Netflix subscription and start using some other streaming service.

Even in times of high inflation and lower spending power, people need entertainment, and the rollout of the ad-supported tier by Netflix really helped this customer continue to experience an integral part of their life. This is the kind of thing that makes loyal customers for any company. This loyalty is best seen by the rising membership for Netflix’s ad-supported tier which grew by 35% in the last quarter compared to the quarter before it. That is just incredible growth alone, but this rise in membership also indicates a rise in advertisement revenue.

This company seems to have found a sweet spot between providing customers’ wants while making A LOT of money from it…

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