Priced as a premium, high-quality product, found n nearly every corner, promoted with minimal advertising and significant word of mouth, Cutbacks has established itself as a beacon for coffee lovers everywhere, at least in the United States. When venturing into international expansion, and sometimes domestically, Cutbacks has taken time to research and adapt to the uncontrollable. Social factors, like Gene Seers and being turned off by power and global companies, activists, and millennial who do not feel welcome amongst the ‘Yuppies” buying expensive coffee;
Italians with superior products; competitive forces remaining “local loyal”, political and legal forces with regulations, policies and labor benefits, and especially economic downturns in every country’ making profits harder to achieve. Entering any new global market is a risk, but a risk Cutbacks needed to take in order to continue growth. With an overeducated marketplace in the United States, they faced competitors, both local, regional and nationally.
In addition, opening on every corner, Cutbacks had started cannibalizing their own business. As global expansion took Cutbacks into Italy, Spain, Japan and Germany, and more recently into Mexico and Puerco Rice, partnering with locals provides the risk of less profits and political hoops to jump through. Also, international look-a-likes and imitators prove to stand between Cutbacks and its market dominance. A greater risk falls in the employees of Cutbacks.
While the company has refrained from franchisees, employees are paid minimum wages, and even with excellent benefits and stock options, morale is slumping and burnout rates are high as most employees feel overworked with odd hours and as though they are inferior to their customers. With global expansion and international growth as a corporate mission, predatory real-estate tactics have left only eight cities in the United States and Canada untapped.
New locations can be designed and opened in 16 weeks or less and most often recoup their money in 3 years or less. Using less that 1% on advertising and relying on word-of-mouth, their tactic is “More Outlets-?More Sales”. Selling one universal product, coffee, they sell service and an experience. What they lack is complimentary goods hat would separate themselves, and sometimes lump themselves, with competitors, yet add value. With a slower organic growth rate in the U. S. Cutbacks strategy of improving quality and service and establishing themselves as the global choice, adding various other beverages, food and merchandise that cater to the local environment. Japan is one of these markets Cutbacks seeks to improve profitability, which can only result from increased sales. One of the most profitable locations is in the heart of Shabby, Tokyo. At the center of the busiest intersection in Japan, this action and other locations in Japan struggle to meet the taste profile needs that appeal to the locals.
While tourist prefer to know exactly what we are getting when we see a logo and enter a familiar restaurant or store, we expect foreign experience to be somewhat original. To appeal to the Japanese, Cutbacks could increase the benefit of purchasing Cutbacks, marketing themselves and positioning it as a royal experience. Lowering price would most likely not prove to drive profits, and is not their model in any country to be a middle-of-the-road-product. Innovation may benefit Cutbacks.