• New figures released by the company show that, instead of the bottoming out Starbucks predicted in October, the company's same-store sales have gotten worse. Though its overall revenues have grown, sales at U.S. stores open at least a year fell 9% in October and November from a year earlier.

What is the plan to fight back?

• Starbucks, a brand that encouraged consumers to trade up, is changing tack after discovering that its most faithful customers are saving money in part by making fewer visits to the chain. It recently launched a loyalty card and other promotions that offer customers cheaper drinks and allow it to target the chain's most-frequent visitors, who come to Starbucks an average 16 times a month.

In addition, there is apparently an aggressive cost cutting program underway. 

In the end, as we have noted, this is what happens to a high end luxury that is largely indistinguishable from its competitors.  For Starbucks to buck the trend, it needs a different strategy.  Social Responsibility is this company's ticket to profit maximization.  It has taken small steps in that direction (a nickle to the Global Fund for certain drinks and free coffee on election day) but clearly views the strategy in a tepid fashion.  The benefits of the strategy will take time to sink in.  The longer the delay, the longer the bad news will likely last.

As part of that, consumers needed to know that a purchase at Starbucks would make a difference.  Social Responsibility in short.  Free coffee on election way provided some evidence that this was a winning strategy.  We have held up Chipotle (a chain begun here in Denver) as an example of the successful use of this strategy.  The burritos at Chipotle are not cheap but consumers are likely aware of the organic nature of the ingredients and the commitment to free range meat and poultry.

With that in mind, we note that Starbucks seems to be moving in that direction.  A Friday purchase at a Starbucks in Dummont, Colorado, right of Interstate 70, revealed, on the sleave of the chai, that the purchase of certain drinks would result in the contribution of 5 cents to the Global Fund, a highly respected organization combating a number of diseases including AIDs.  A subsequent email (the same day and inserted below) repeated the offer.  So does the Internet, where the location of participating Starbucks can be found.

The approach is a good beginning but very limited.  The contribution only occurs upon the purchase of three drinks, Espresso Truffle, Gingersnapp Latte, and Peppermint Mocha Twist.  The program also, apparently, expires on January 2.  It would be far better for Starbucks to create a culture of Social Responsibility that applied to all purchases in the stores.  In other words, customers would know that every purchase made some type of positive contribution.  But hopefully Starbucks will see some type of improvement in sales as a result of this promotion.  Maybe then the company will realize that it needs to by a much broader, systematic approach to the Starbucks experience.

And, maybe, Starbucks will finally realize that it needs to provide free Internet.

• The company's fourth-quarter report didn't do much to bolster investors' confidence. Profit fell 97 percent, hurt by hefty charges for closing about 600 U.S. stores and 61 locations in Australia. Same-store sales, or sales at locations open at least a year, dropped 8 percent in the U.S. as fewer consumers came in and those that did bought less.

The gold card experiment in Denver has been abandoned, replaced by a card that costs $25 a year in return for a 10% discount on most purchases and free Internet.  Some analysts speculate that in a recession, sales of $4 lattes will continue to fall.  Share prices have already fallen dramatically, with the price cut in half since the beginning of the year.  

Starbucks has been trying to stem the fall by competing as a commodity.  Customers have been offered small emoluments in an effort to generate business.  Loyalty programs have been commenced.  Free flavors and an occasional free latte are the primary weapons used to address declining sales.  But from all accounts, it isn't working.

What can and should Starbucks do?  The company should compete not as a commodity but as an experience.  As part of that, stores should be better designed to encourage in house consumption.  Some of the newer, smaller Starbucks are downright uncomfortable, with chairs and tables jammed into small spaces.  This would also mean providing free Internet, a step taken by almost everyone (including, by the way, some grocery stores and McDonalds franchises) except, apparently, Starbucks.  In addition, however, the company should focus on social responsibility and advertise the social b