Over the last century traditional funeral homes have been known to have a “moat” around them in relation to potential competitors.  Those moats have brought about many barriers to entry to the profession and helped many family funeral homes thrive.  However, as we move forward some of those advantages for existing funeral homes are going by the wayside and funeral home owners have to continually “up their services” to keep their moats full.

 

I was reminded of that situation when I read this recent article from Seeking Alpha concerning coffee chain Starbucks titled, “Starbucks lost its moat, now comes the re-pricing”. 

 

From my point of view, just as in funeral service, there are items that society changes to “lower the water” in a business’ moat, but I think Starbucks is a great example of instituting self-imposed methods that can hurt one’s business.  I think that is a lesson for all businesses, including traditional funeral homes, to be aware of.

 

I discovered Starbucks at about the same time the internet was coming into vogue — the late 1990’s.  Our young family would vacation in Vail, Colorado, and I located a Starbucks about a block from our vacation lodging.  It was awesome – big comfortable leather chairs, a fireplace, quick service, and fairly priced coffee. I would take an hour each day, purchase the Denver Post, and sit comfortably in a great atmosphere — it was a place I was totally content.

 

That modus operandi seemed to work for Starbucks as for the next two decades the company grew and grew. . . .and as an owner of their stock I saw my investment grow and grow also.  If you followed the company you would have also seen that explosive growth with the stock going from about $3 per share in 2000 to about $120 per share in 2021. . . . .Their number of stores and revenues went in the same direction.

 

However, somewhere along the way in the late second decade of the 21st century the business started to change.  They added all kinds of options to their coffee drinks which for me slowed down the process of getting my coffee —  sometimes waiting five minutes or more in line and another 10 minutes for them to fulfill a simple cup of coffee order.  The price went up to about $5 for a simple cup of coffee.  Many of their buildings added more and more seats to accomodate larger crowds replacing the very comfortable large leather chairs.  . . . and other changes were added to increase profitability . . . and in my opinion, decrease the customer experience.

 

The politics of Starbucks seemed to either change or be more overt also. The company embraced Diversity, Equity, and Inclusion formats and seemed to be in a media-followed constant struggle with their workers over pay, benefits, and hours worked.

 

Finally, competitors popped up in the market that used the old Starbucks method —  quick coffee, reasonably priced, comfortable seating, and seemed to stay out of the political arena. . . . Today, as the linked article states, Starbucks is trying to get their mojo back.

 

It’s a Lesson —  I write this today as the author of the linked article notes that Starbucks is pursuing a “Back to Starbucks” strategy.  The author also doesn’t believe that strategy will work because of the damage done by the above-mentioned strategies over the years.

 

I can tell you that I’ve changed my allegiance to a northern U.S. based chain, Caribou Coffee, which seems to operate on the old Starbucks modus operandi —  although I see them making some of the same mistakes such as “too many” options which can cause delays in getting orders.  In my Minnesota community we have two Starbucks now and I don’t believe that I have ever bought a cup of coffee in either of them. . . . That shows that when allegiances change, many times they change for good.

 

Funeral homes have big moats — such as licensure to operate, licenses for employees, a high cost of buildings and fixtures, and satisfied customer families going back sometimes generations — that are difficult for new competitors to penetrate.  However, just as Starbucks is being accused of in the Seeking Alpha article, sometimes decisions by management make those moats easier to pentrate.

 

Funeral homes are probably going to have to move forward and offer some of the new products in Death Care in the future without alienating their existing supporters.  My take from this Starbucks article is to be cautious how you do such so you don’t alienate your current customers.

 

A Lesson I Learned from my Dad —   I mention the very pro-active movement of Starbucks in the Diversity, Equity, and Inclusion issues of the recent past.  I take no side with the issue other than to say getting “political” on either side of an issue may not be good for business – in general political decisions can alienate 50% of potential customers.  Here’s an article that Funeral Director Daily published a year ago about that dilemma.  It’s going on 60 years since my father gave me a lesson on that issue and I think it is still great advice for funeral home owners today.

 

More news from the world of Death Care:

• WWII veteran’s grave found empty after daughter hoped to relocate burial site.  CBC News (Canada)
• Fake obituary websites sow confusion, exploitation for grieving families.  What to know.  LoHud.com (NY)
• College blocks grad’s path to family business.  Advocates for Homeschooling
• Arlington National Cemetery welcomes new Superintendent.  Arlington National Cemetery News
• Cremation and natural burials shift South Korea’s funeral culture.  The Chosun Daily (South Korea)

 

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