Commentary: On Why Selling 60-shot Frappuccinos is a Bad Idea for Starbucks.

It's been in the news that a woman in Florida recently ordered a 60-shot Frappuccino using her MyStarbucksRewards reward. Here's a link to one such news story: Grub Street link.

Why is a 60-shot Frappuccino a bad idea at Starbucks?

Is it because she used a Lucky Dozen MyStarbucksReward for her beverage? I say absolutely not. Starbucks operates on the same scale in billions of profit as a small oil company. The rewards program is a huge benefit to them, for many reasons. It creates customer loyalty, creates an urgency to return to stores when money is pre-loaded on cards, creates cash flow, improves speed of service by people not having to count out their change at the register, makes it more likely that customers won't notice price increases when paying with a card, creates brand prestige, improves frequency of visits, reduces marketing expense for trial of new products, and more. No barista should toss and turn at night over the expense of one Lucky Dozen free beverage. Even if it's a $50 beverage. You wouldn't be alarmed to find out that Shell Oil can afford to give out free gas now and then, and so it's not the actual cost of the beverage.

Note that the recent Starbucks "beverage size clarification" statement makes no reference to form of payment. Even if the customer wanted to pay cash, the same beverage size policy is in place.

Is it because it's wasteful - a 60-shot Frappuccino may go down the drain? That's not it either. For the same rationale as above, as a corporation that makes billions and billions in profit, this one drink won't make a dent in anything they do. And most customers won't want to order such an undrinkable drink - they few times this happens is just completely de minimis to the function of the rewards.

Is it the publicity? That's not it either. These news article do an amazing job of driving awareness of MyStarbucksRewards - something that can only benefit Starbucks, and reduces their marketing expense for awareness of the rewards program.

What about legal liability? This is a real issue. The cost of lawsuits and lawyers is way bigger than a $50 beverage. Damn you lawyers. Food and beverage retailers may be subject to tort claims when they sell a product that can be harmful to the consumer. While I don't know anyone who has consumed a 60-shot beverage, I can only imagine, that's going to cause a tummy ache. I think there is a real concern about customers getting sick from these extreme beverages. One way to control what a customer consumes is simply to limit the size of the cup a drink can go into. People love to sue big corporations. State law will vary from place to place on the fine details of this area of tort law, but generally, a food and beverage retailer can be held to "strict liability" for  their products. The concept is this: "One who sells any product in a defective condition unreasonably dangerous to the user or consumer or to his property is subject to liability for physical harm thereby caused to the ultimate user or consumer, or to his property."

All of the above is just my opinion. I don't have any special information why Starbucks has their beverage size policy. This is one of those articles where I fully expect people will disagree.However, I think you think about Starbucks like as if it were a Shell Oil or a bank or any other huge corporation, you'll see that these isolated free beverages are trivial and it's not the cost of the drink itself at issue. Lawsuits however, those are really expensive. If you choose to disagree in the comments, as always I will delete any comments that degenerate into name calling, baiting, or other general nastiness.

My only worry about all this is that when handsome workmen wearing work boots, and a hard hat under one arm, walk in at 7:00 AM with a 32-ounce thermos asking for brewed coffee in it, they'll be told "no" they can't do that. I think a big thermos of coffee is a favorite old standby for many in the working world, and it's usually consumed throughout the day. I feel like the beverage size policy should have an exception for brewed coffee poured into a thermos.

"What Customers Mean to Me." (Guest post by a 4-year partner).

Fun Cards from Starbucks Japan!