OPERATIONS MANAGEMENT: STARBUCKS AND GREGG'S IN UK

Introduction and Overview

In today’s world, we witness a new coffee era; coffee has been diversified and transformed into cappuccino, Frappuccino, Lattes and a lot more. Not just any coffee bars but speciality coffees are here to take the beverage into a new level. Having said this, we see the launching of many international coffee stores like Starbucks, Tim Hortan and others. In the UK, the third wave of coffee lovers has further supported this venture (Admin, 2019).

In this project, we shall consider the case of Starbucks and develop various points on the same. In Part A, we shall present a comparison between Starbucks and Gregg’s coffee bar in the UK and in Part B, we shall discuss the supply chain management process of Starbucks.

Greggs and Starbucks set to move in to York shopping centre

History

Starbucks operates globally serving millions of customers on a daily basis. The company operates internationally with more than 30,000 retail stores in 80 countries. Its global operations depend on the service provided through a number of international partners, and in particular a worldwide network of franchises and licensed Starbucks cafes. This allows for local responsiveness through a degree of decentralised decision-making, while providing the advantage of operational efficiencies by leveraging global standards and core competencies.

Gregg’s is the largest bakery chain in the UK. Established in 1970, it specializes in savoury and sweet products. The company currently has 1764 outlets globally. The chain recently added some new menu items and saw a change in their sales figure. The new and improved coffee and cake items had significantly risen their sales amount. The company also followed the 100 pc Fairtrade policies and proved to be a major competitor of Starbucks, with Starbucks selling their latte at 2.25 pounds, while Gregg’s selling the same at 2.10 pounds (Duggan, 2019).

The 4 Vs: Starbucks and Greggs

The four Vs are usually Visibility, Variety, Volume and Variation. Based on these four models we share compare the Starbucks Store with Greggs.

Visibility

Both the companies as mentioned above have operations within close proximity of the BPP University Shepherds Bush campus. Starbucks has a licensed store located at 62 Uxbridge Road, Shepherds Bush, London, ENG W12 8LP, while Greggs is located a few feet away at 68 Uxbridge Rd, Shepherd's Bush, London W12 8LP.

Variety

Variety generally refers to the products found at both the coffee shops. As mentioned earlier Greggs is mainly preferred as a breakfast joint by most of the locals there. The most popular products here are savoury items like sandwiches and sausage rolls. Cakes and pies are the recently added items with various blends of coffee. Several other cold and hot beverages are also available at Greggs. An annual blind test was conducted by the store where four out of five customers preferred the coffee blend at Greggs over Starbucks. Gluten-free items and healthy beverages are also introduced this Christmas season (Davidson, 2015). Starbucks menu is more or less the same all around the world, especially it's coffee blends recipes. Hence the customers whether local or tourists have an idea of what to expect. Unlike Greggs where many locals and tourists flock because of its rich history in the UK. Hence we can say that Greggs is in a better position when it comes to variety.

Starbucks and Gregg's located at close proximity

Volume

There are about 1823 Gregg’s bakeries throughout the UK. Considering the habitation of the area as 25,000 almost 60% of them are more likely to visit Greggs and 40% at Starbucks. We can take a look at the net profitability of the company. It indicates the overall effectiveness of the management team and the mode of operation that each organisation takes. In the year 2015, Greggs Plc saw net profitability of 49.74/803.96 i.e. 0.0619 in British pounds. The net profitability of Starbucks in the same year was 59/1514, which was about 0.039 in British pounds. Owing to international popularity, Starbucks, as expected, was more profitable than Greggs (Reuben, 2016).

Variation

Since the year 2015 Greggshas managed to increase its half-yearly profit by 50% and has totally dedicated to reinventing themselves by introducing new menus and recipe blends. Firstly the opening hours have been extended by half an hour so that staffs have enough time to make everything ready. They have recognized certain food trends like healthier food versions and on the go menus. Concentrating on these two factors, ‘on the go’ food has been introduced by this chain and low calorie and healthier alternatives have also been added on the menu. Gluten-free bread and sugarless drinks are the newest items (Rankin, 2014). Vegan versions of sausages are the most in-demand by the customer. They have also introduced a 2-pound meal on the go which has a drink and 2 pizza slices or wraps(Greggs, 2019).

Gregg's variation with combo offer of coffee and muffin!

With Starbucks coming into the picture, the company has taken healthy food to the next level. They have formed strategies for customers with food allergies. One of the examples is offering coconut milk and almond milk instead of soy milk. Soy products having the highest number for food allergies can be replaced with special requests. It is also offering Vegan alternatives to cow milk and dairy-free lattes (Kline, 2016).

 

Starbucks has over 10 variations of Lattes

Comparative Performance Objective Analysis

Performance objectives can be analyzed by five major factors like cost, speed, quality, dependability and flexibility. Speed is an integral part as customers waiting time must be reduced to increase customer loyalty and customer retention. The profitability is also affected when customers have to wait for a longer time for their food. This is achieved by having a smooth internal communication process among the employees. Training of the employees also matter. The average waiting time at Starbucks store is 3-5 minutes(NEWCOMB, 2015) while at Gregg’s it is on an average 5-6 minutes.

Cost as discussed earlier Gregg’s is low priced than Starbucks. This is a major factor while many of the locals flock to Greggs for their breakfast and other meals of the day. Greggs in the year 2018 sold almost 2.5 million sausage rolls a week. A similar dish at Starbucks would cost about 1.75 pounds while at Gregg’s it is only 80 pence.  The quality factor for both Starbucks and Gregg’s is on the same level, as both deliver the highest quality food products with first-class ingredients.

The dependability keeping in mind the store at that particular location is more for Greggs rather than Starbucks. The Guardian (Cumming, 2016) has termed Britain to be a strictly Gregg nation owing to the fact that English customers are more reliable to tradition and culture rather than change. Since Gregg has been in the UK since the 1970s, it has a major impact on the minds of the public. With regards to flexibility too Greggs and Starbucks are on the same level, as both the brands are quick enough to introduce new products and strategies in par with new customer demands. Speed is also a linking factor here.

High Greggs has said that it will continue with its shop opening strategy, with new format stores for different locations, also set to progress.

Design Analysis: Starbucks and Greggs

The layout for both coffee shops is made in such a way so that the regular operations here are not hampered. All activities follow a sequence so that maximum utilization of time can be achieved. The kitchen is usually stationed at the back area hidden from customer view. The sitting area, on the other hand, is usually done in a spacious area where customers have enough space to meet and greet and have a cup of coffee with some snacks. The cafes have special boards which are arranged on the shop wall, which features the special menu and the products which are for sale. There is no parking facility exclusive to the store here and the customers have to rely on public parking space nearby.

The Starbucks here is open from 8 AM to 8 PM and are equipped with facilities like mobile payment and orders, digital payment, warm food and coffee and also digital rewards (Starbucks, 2019). The Greggs store nearby is open from 6.30 AM to 6 PM. This is majorly a breakfast area, where the popular items are sausage rolls, pies and coffees. The amenities are almost the same at Starbucks (Yell, 2019).

First look inside Grimsby's new sit-in and takeaway Greggs store

Both the stores have the same or similar customer service process which starts with the customer choosing the meal, placing an order at the cashier. This is followed by payment and pick up counter, where the customer receives the meal ordered. The customer also mentions while ordering whether he or she wants the meal on the go. Based on this, the meals are received packed or unpacked at the pick-up counter.

All of the above are mentioned keeping in mind the location of the store at Uxbridge Road, London. The design and the customer processes are done keeping in mind the four Vs and other factors as mentioned earlier. All these maximize the service process and increase the customer satisfaction level.

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