Comparative Analysis of Caffe Nero and Starbucks: Business Report

This business improvement report presents a comparative analysis of Caffe Nero and Starbucks, based on a visit to their London branches. The report critically examines key aspects, including staff, product offerings, pricing, customer experience, and inventory management. The report highlights Caffe Nero's shortcomings, such as staff training, customer service, hygiene, and inventory freshness, while showcasing Starbucks' strengths in these areas. Detailed recommendations are provided for Caffe Nero to enhance its performance, including staff training programs, improved customer service protocols, enhanced store hygiene, and optimized inventory forecasting. The report aims to provide Caffe Nero's CEO with a comprehensive business improvement plan to boost operational efficiency, customer satisfaction, and overall business success.

Running head: BUSINESS IMPROVEMENT REPORT
BUSINESS IMPROVEMENT REPORT
Name of the Student
Name of the University
Author Note

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Executive Summary
Competition is necessary to keep up the operations of the business as it often serves as a
motivation to perform better. The given report takes the form of a business improvement report.
It covers various aspects of the earlier investigation which was undertaken during our visit to
Caffe Nero and Starbucks in London. The report begins with a brief introduction about the
assignment followed by brief details of the visit. The five critical aspects of the visit ranging
from Staff, Product offerings, Price, Customers and Inventory has been discussed critically and
suggestions for improvement have also been provided.

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Table of Contents
Introduction......................................................................................................................................3
Brief note about the visit..................................................................................................................3
Critical Analysis..............................................................................................................................3
Staff..............................................................................................................................................3
Customer......................................................................................................................................5
Product offering...........................................................................................................................6
Prices............................................................................................................................................7
Inventory......................................................................................................................................9
Conclusion:....................................................................................................................................10
References......................................................................................................................................11
Bibliography..................................................................................................................................12

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Introduction
The report will be discussing the comparative analysis of two cafes; Caffe Nero and
Starbucks, Various aspects of the Café marketing strategy, It will maintain a discussed on
relevant grounds such as Price, offering , Inventory and customers. Each aspect at Caffe Nero
will be briefly explained which will then be followed by certain examples and suggestions as to
how the performance need to be increased the main purpose of the report is to provide a business
improvement plan which will help the CEO to improve the business operations.
Brief note about the visit
Last month, we team members visited the Firth Street branch of Caffe Nero in London
and then made a visit to the Starbucks caffe at Upper Street (Caffe Nero 2018). After the
research on the two companies on the various aspects, it could be noted that the Caffe Nero shop
has been performing poorly due to a wide variety of reasons which range from stale food, poor
management, no employee reaction and inadequate display. Hence, the given report seeks to
summarize the findings of the visit to Caffe Nero and shows how Starbucks is performing better.
Following that it provides recommendations for Caffe Nero to improve its performance. These
aspects which will be discussed include product offering, price, inventory, Customers and the
staff.
Critical Analysis
Staff
Caffe Nero

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At Caffe Nero, Firth Street branch there were 15 staff members resent out of which only
4 were female. A two shift component is not present and the same set of staff has to work for the
whole time. The lack of task decision among the employees made the whole system unorganized.
Due to this, my visit witnessed lack of smooth service to the customers and I witnessed a case of
double order taken from the customer, which made him agitated at the staff members.
Furthermore, the staffs members present at the branch are not courteous. When approached
about the double order, the staff showed their frustration and did not apologize for the same. As
they area covered by the outlet is small, the number of staff members present is too many.
What Starbucks is doing better?
The staff members at Starbucks work in shifts and this automatically makes the service
twice as efficient as Caffe Nero as the staff is in a stable stated during the whole time. The tasks
are divided in the beginning of the day so as to ensure rotational shifts for all and to ensure the
work is distributed equally (Starbucks Coffee Company. 2018. This helped the members to
handle the customer orders efficiently and to make sure that the staff handles each customer well.
The manager at the branch was active and personally looked over the operations. The staff was
quite courteous.
Recommendations for Caffe Nero:
1. Develop a training program for the staff and teach them the importance customer
communication.
The employees at Caffe Nero need to be provided with adequate training in order to help
them to understand the importance of communicating with the consumers in a polite manner

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(Bratton and Gold 2017). This is because the caffe is a hospitality industry based unit and
customer satisfaction is the base for success.
2. Divide tasks equally among members and starting the double shift concept
The lack of task division and rotational shifts for the staff must be a reason of frustration
among the staff as they have to work for longer shifts if the shift is divided into two stages, the
given problem could be solved.
Customer
Caffe Nero
During our visit, the number of customers present in the Caffe was 10. The place was
small and congested. The toilets were unhygienic and two customers complaint about it. The
seats are not adequate enough to handle larger foot fall. The lack of staff courtesy and double
orders was successful in making the customers angry at the service.
The prices of the products were quite low at a mere amount of $5 and on an average 150
customers visit every day. This means that the caffe is serving 150 customers in a day and earns
revenues of around $750 daily. The unhealthy conditions at the caffe and bad ratings put the
Cafe’s name down.
What is Starbucks doing better?
At Starbucks there was a large footfall which immediately created a perception in our
minds, that it is a more popular place then Caffe Nero. On a daily bases, around 250 customers
would be visiting the café. Hence the average revenue daily would be 2000$ which is much
better than its competitors. As the spacing is enough, a large number of customers can be served

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at the given time. Furthermore the presence of well trained staff, is the unique selling point of
Starbucks
Improvement for Caffe Nero:
It is recommended that the firm that it notes and implements the following:
 Increase the seating facility- As witnessed the seating facility at Caffe Nero is in adequate
and more seating area should be provided as the location of the particular outlet is a
tourist area. Increasing the seating facility would ensure that the caffe can cater to more
staff.
 Maintain hygienic conditions in the caffe will play a great role in making Caffe Nero at
the top of the market. They can employ external cleaning staff which would then assist
the café in keeping clean at all times and keeping the toilets clean is a major sign the
extent to which the caffe can go to keep its customer happy (Ludwig et al. 2014).
 Train staff- As stated in the earlier aspect, training the employees would further improve
the customer relations
Product offering
Caffe Nero
During our visit to Caffe Nero, I witnessed that the Caffe has a large menu offering for
the customers and that this strategy is quite similar to that of Starbucks. The offerings made
ranged from sandwiches, cookies and all kinds of beverages. However, the presentation of the
items was not that accurate and the firm could have done better to display the items in an
appropriate manner to ensure that the customers who were visiting the outlets for the first time

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had a clear idea. Secondly, displaying adequately enhances sales opportunities. The staff behind
the counter was unresponsive and made no effort to sell an item.
What is Starbucks doing better?
Just like Caffe Nero, Starbucks offers its customers with a large variety of products.
However, the offerings which ranged from salads, cookies, doughnuts, breads and sandwiches
were displayed in an attractive manner. Furthermore, the staff behind the counter as well as at
other areas made an effort to help the customers with their choices and promote a sales purchase.
This changes customer perception as they find employee interest a favorable sign.
Recommendations for Caffe Nero
 Engage in attractive window display- An attractive window display goes a long way in
attracting the employees to buy the selected product of the organization. If the items are
arranged in color synchronization or arranged in a way that it is easily able to capture the
attention of the people, then it helps in making extra purchases from the consumers side.
 Provide incentives to employees for sales initiative-The reason why certain employees
may not be taking an initiative to promote sales may be due to lack of incentives by the
organization to make such an offering (Walker 2016). Hence if the company is able to
offer certain incentives to the employees, they may be interested in doing so.
 Offer fresh items- It is advisable to always make offerings of fresh products to avoid
consumer dissatisfaction.
Prices
Caffé Nero

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Caffe Nero`s strongest aspect is its reasonable price offerings. Although the firm is a
multinational, the prices offered are pocket friendly. I believe that as the firm offers the good
pricing, it should make sure that the quality of products provided to the customers is satisfactory.
An average meal at the coffee shop would cost around $5 which is good.
Furthermore, if customers insist on receiving a discount, then the manager does not
refuse them and makes an offering of around 5% of the sale price. Providing discounts is an
efficient way of retaining customers.
What Starbucks is doing better?
Although the prices at Starbucks are considerably very high when compared to the prices
as offered by Caffe Nero, Starbucks makes up on the quality aspect. The company also does not
indulge in any kind of bargaining scheme because of its high amount of confidence in its product
offering the coffee shop does have a discount for regular customers though.
Recommendations
Caffe Nero could implement the following:
 Pace up its quality- Caffe Nero should stress more on its quality aspect so that it does not
have to price its good lower than Starbucks. By pricing low, it is agreed that it is being
able to attract the customers but it is losing out on its revenues.
 Bring prices closer to that of Starbucks- Once the quality is bought up to the optimum
level, Caffe Nero should revise its pricing system and bring it to a rate similar if not the
same as Starbucks. This shall ensure that the coffee shop earns larger revenue.

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Inventory
Caffe Nero
Although the outlet size at Firth Street is too small, Caffe Nero offers a large inventory
option similar to that of Starbucks, The menu of Caffe Nero comprises of shakes, coffees,
cupcakes, yoghurt and sandwiches. Out of the given items coffees such as Coffee Caramel, Iced
Latte, Mocha, Tarts, Muffins and Sandwiches sell the best.
However, during our investigation I noticed that the food was not fresh and some other
customers in the branch complained of being offered stale food. The inventory at Caffe Nero is
perishable but being located in s tourist spot, the caffe needs to see to it that the inventory is
fresh, the condition of the caffe was extremely shabby and the customers avoid visiting it which
is the primary reason why the products go stale.
What Starbucks is doing better?
Starbucks has a wide menu which comprises of bagel, tea, coffee, ice cream, patties and
protein boxes. All the products offered by Starbucks are fresh and made just after receiving the
order. The company sees to it that the conditions within the cafe are not unhygienic so as to
ensure adequate footfall. If the items sell fast, it helps to avoid stale products accumulation to
avoid wastage.
Although the café industry should engage good practices however in the business world
things work in a different manner and the company needs to look after h needs of all.
Recommendations to Improve

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 Inventory forecasting- Caffe Nero should engage in an inventory forecasting technique
whereby the company forecasts its future requirements and stocks accordingly. With the
absenc3 of this many of its items are going waste.
 Target market forecasting – They can even forecast the footfall for the day and prepare
the dishes accordingly. Past trend analysis can be done. For example, when we visited the
shop for an hour and a half almost 4 new customers visited which means there will be at
least 8-10 customers n an hour. Accordingly the product should have been set up for
inventory.
 Maintaining hygienic conditions- Maintaining clean and hygienic conditions at the stores
would go a long way in determining the footfall of the customers.
Conclusion:
Therefore from the given analysis it can be stated that there are various aspects with
respect to which the company Caffe Nero should prepare itself for the future. As the company
has a well established competitor, its efforts should be double of what is generally expected. The
given report analyzed the various aspects of a restaurant that had been visited during the
investigation stage. These aspects include Price, Inventory, Product offering, staff and customers.
Certain recommendations to improve in the aspect have also been provided.
Any company functioning in the competitive business environment should see to it that
the firm harnesses those opportunities easily.

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References
Bratton, J. and Gold, J., 2017. Human resource management: theory and practice. Palgrave
Caffe Nero, (n.d.) 2018 . Award Winning Italian Coffee | Caffè Nero US Coffee Stores. [online]
Available at: https://caffenero.com/us/en/ [Accessed 19 Mar. 2018].
Ludwig, I.A., Mena, P., Calani, L., Cid, C., Del Rio, D., Lean, M.E. and Crozier, A., 2014.
Variations in caffeine and chlorogenic acid contents of coffees: what are we drinking?. Food &
function, 5(8), pp.1718-1726
Starbucks Coffee Company. ,2018. Starbucks – The Best Coffee and Espresso Drinks. [online]
Available at: https://www.starbucks.com [Accessed 19 Mar. 2018].
Walker, J.R., 2016. Introduction to hospitality. Pearson Higher Ed.