Starbucks’ evolution from Seattle coffee house to corporate giant has caused hand-wringing in recent years as it has tried to retain its neighborhood coffee-shop feel while simultaneously covering the globe.  When Howard Schultz resumed his role as CEO in January 2008, he initiated changes that were meant to bring the company back to its roots—grinding coffee beans in stores, menu revamps, and even unbranded “local” stores.

Starbucks latest change was announced last week when baristas were asked to focus on making no more than two drinks at a time. Such edicts, while admirable in theory, may ignore the reality of a modern-day Starbucks.  Baristas are already complaining that the new requirements will limit their ability to deal with long lines.  Debates between quality and quantity are not new nor are they limited to Starbucks. Different chains have landed on different sides of the debate – who is right? What do customers actually prefer?

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The restaurant industry prides itself on the fact that more American’s eat out today than ever before with the industry boasting a 49% share of the food dollar. This trend hasn’t gone unnoticed by retailers who are expanding offerings to compete head on, according to a recent report.  Supermarkets are leading the race, owning nearly two-thirds of prepared foods purchased at retail, while convenience stores are slowly entering the arena as well.  The Pantry and Quick Chek have recently announced plans to expand their prepared foods offering. How will this trend affect traditional restaurant revenues and profits? Do restaurants face real threats from C-Stores and Grocers?

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Buoyed by its success with coffee and intent on adding $125k per store in annual drink sales, McDonalds has pushed into the fruit smoothie market with two new offerings.  Current smoothie purveyors Jamba Juice, Panera, and Starbucks have publicly offered a sanguine view of the entry with hopes that it will grow the $2.5 billion market.  But P.R. statements aside, McDonalds’ history of success is clearly rattling some nerves:  Jamba Juice recently released an advertisement parodying burger chain smoothies by facetiously offering a “Cheeseburger Chill Smoothie”.  Early returns suggest these companies have reason to worry as McDonalds has canceled their nationwide free smoothie trial due to “unprecedented demand”. Panera’s strategy of positioning itself as a premium brand is likely to be mirrored by the other established smoothie players, but more innovative thinking may be required to keep McDonalds from taking a big sip from this market.

Veterans of the industry (or those with a taste for smoothies) may remember the disaster that was WhipperSnapple – customers struggled with the concept of prepared beverages in a can and a few smaller chains suffered through the first attempt at smoothie introduction in the late 1990s. While the growth of Jamba Juice and McDonald’s early successes seem to bode well, smart chains are looking to run intelligent testing of the smoothie concept first. This testing will drive valuable insight into which flavors and smoothie styles customers will positively respond to as well as understand the logistical and operational impacts of introducing new food prep fixtures required to provide smoothies.