A class action lawsuit against Starbucks is seeking $5 million in damages over the key difference between hot drinks and cold drinks: ice.
When you order a 24-ounce "venti" coffee at Starbucks, you're getting 24 ounces of coffee. But when you order a 24-ounce iced coffee, you're getting 14 ounces of coffee, plus a whole bunch of ice.
And if customers knew that, a lawsuit filed in federal court alleges, they wouldn't have been willing to pay nearly as much. The lawsuit is seeking $5 million in damages on behalf of everyone who's bought a Starbucks cold drink since 2006.
This is a silly lawsuit; it implies, among other things, that customers don't realize that ice takes up space in drinks. But the fact that Starbucks, which got its start with hot coffee and blended cold drinks, is facing a lawsuit over how much ice it dumps into customers' cups actually is an interesting insight into how its business is changing.
Starbucks' future might not be in hot coffee
Selling coffee in the morning is a lot more competitive than it used to be, and Starbucks is getting crunched at both ends of the market. Dunkin' Donuts has expanded nationally. Krispy Kreme is trying to make its coffee seem more upscale. The Canadian chain Tim Hortons has merged with Burger King and is increasing its presence in the United States. And at the higher end of the market, super-upscale coffee — pourovers, single-origin beans, and so on — is growing so much that Starbucks opened a fancy tasting room in New York in 2014.
So Starbucks' future growth doesn't rely entirely on hot coffee at all. Instead, according to the company's five-year plan, the overall goal is to keep people coming into stores in the afternoon and evening, long after they've finished their morning coffee.
That means selling beer and wine, food, and yes, iced drinks:
- Starbucks owns the tea company Teavana, and its drinks — including the signature shaken iced tea — drove 14 percent of the growth at Starbucks retail stores in 2015.
- The company is continuing to test more tea drinks, including tea-juice blends and sparkling teas, all served over ice.
- In 2014, Starbucks introduced its own brand of soda, Fizzio.
- Cold-brew coffee — served over ice — is now standard in all US and Canada Starbucks.
And iced drinks are a moneymaker in part because people are willing to pay more for them. Americans really want their cold beverages, ice and all.
- This lawsuit is being compared to the infamous "hot coffee" lawsuit against McDonald's. But the hot coffee lawsuit wasn't nearly as frivolous as you might remember — yes, a woman was awarded (initially) millions of dollars of damages, but she was also 79 years old and had suffered third-degree burns. The New York Times' Retro Report revisited the case in 2013.
- Everything about the Starbucks lawsuit seems as American as possible, including the brouhaha over using ice in drinks at all. There's no definitive answer on why Americans like ice so much more than other countries, but this Quora thread is pretty interesting reading.
- Another recent lawsuit claims it's not just the iced drinks — Starbucks is underfilling its lattes, too.