Brewed to Order: Starbucks, CosMc’s, and the Latte-est Trends in Mass Customization

This Week’s Focus: Competing Approaches to Mass Customization

As Starbucks navigates the balance between operational efficiency and customer satisfaction, its shift under Brian Niccol’s leadership toward a more streamlined service can potentially enhance its value with improved speed and simplicity. On the other hand, McDonald’s-backed chain CosMc’s leans into the American desire for both instant energy and self-expression, betting on the appeal of variety without the need for full personalization. This tension between extensive choice and efficient service illustrates the broader consumer trends and sets the stage for our exploration of mass customization strategies in today’s market.

Several weeks ago, I wrote an article on Brian Niccol, Starbucks’ new CEO, anticipating that based on his (successful) time at Chipotle, he will be steering Starbucks on the route to efficiency and agility. 

And I was right!

On his first conference call with investors, he announced his vision for the brand’s future: rather than adding new choices to Starbucks’ famously diverse menu, he plans to streamline it. 

Citing operational complexity and customer wait times, Niccol argued that Starbucks has reached a point of “diminishing returns” on its exhaustive customization options. “We have to make it easier for our customers to get a cup of coffee,” he stated. Niccol’s goal is clear: to bring Starbucks back to its roots as a community-focused coffeehouse, emphasizing efficiency, simplicity, and quality.

This clearly goes against the trend seen among other chains that are increasing their drinks’ variety. 

CosMc’s, a new McDonald’s-backed chain, is making waves in Texas and Illinois. A recent article from the New York Times captures the overwhelming nature of CosMc’s menu, where drinks like the Sprite Moonsplash and Beach Protein Frappé invite customers into a world of endless, often bewildering variety. “You can’t just get black coffee,” quipped one customer, echoing the experience of many who scroll through the kiosks’ menus filled with eclectic options like “Popping Pear Slush” and “Berry Hibiscus Sour-ade.”

Starbucks (pre-Niccol), and CosMc’s are part of a broader trend where people use product variety as a way to express individuality, fueled by social media: 

“Inspired by the popularity of cucumber salad recipes on TikTok, Audrey Finocchiaro, one of Nitro Bar’s founders, recently posted a video of herself making a cucumber latte, muddling the slices with milk and adding homemade blueberry syrup and espresso. Several customers asked her to put it on the menu. (She hasn’t yet.) Cucumbers in coffee? Surely this is a sign we have run out of ideas.”

Starbucks is the world’s second-largest coffee chain, partly due to how it embraced customization. Starbucks’ menu, as highlighted in my earlier article and corroborated by the New York Times, offers customers a chance to stand out in a sea of coffee cups, leading to complex orders like a ‘Pumpkin Spice Latte with soy milk, extra cinnamon, and three pumps of caramel syrup.’ Baristas note that over one-quarter of drinks sold in the U.S. come with three or more modifications, underscoring the degree to which customization drives Starbucks’ appeal. 

This makes the new CEO’s decision all the more interesting. 

This contrast in approaches—Niccol’s restraint versus CosMc’s embrace of flamboyant variety—highlights a key question facing the beverage industry: Does customization truly offer value, or has it spiraled out of control? 

Starbucks and CosMc’s represent two competing philosophies on customization. For Starbucks, the focus has turned toward balancing operational efficiency with customer satisfaction, a shift aimed at reining in the unwieldy process of individualized orders. 

CosMc’s, however, has leaned into what the New York Times describes as “a very American need for instant energy” and “a very American desire for self-expression,” betting that consumers will embrace variety for the sake of variety.

The tension between offering extensive choice and managing the realities of efficient service, sets the stage for our exploration. 

Let’s delve deeper. 

Mass Customization

The term mass customization gained popularity in the early 1990s, largely due to B. Joseph Pine II’s influential book Mass Customization: The New Frontier in Business Competition, published in 1993. Pine’s work captured the attention of both academics and practitioners, as it offered a new way of thinking about balancing customer personalization with the efficiencies of mass production.

Mass customization refers to the ability of a company to deliver goods and services tailored to individual customer preferences while still achieving economies of scale typical to mass production. This approach combines the personal touch of customization with the efficiency of large-scale operations, allowing for unique products at relatively low prices.

The concept was timely, as industries were evolving with advancements in technology—especially in manufacturing and information technology—that made it possible to customize products on a large scale. This was a period when businesses were moving beyond the traditional trade-off between variety and cost, thanks to innovations that allowed more flexibility in production and supply chain management. Pine’s framework helped crystallize the idea that, as industries matured and customer preferences diversified, companies could gain a competitive advantage by offering customized products without the cost penalties traditionally associated with bespoke production.

Do Starbucks and CosMcs fall into the category of mass customization? 

Starbucks epitomizes mass customization with its extensive drink modification options. Customers can personalize their drinks by choosing different types of milk, adjusting sweetness, adding flavored syrups, and requesting toppings like cold foam or whipped cream. This model allows millions of people to order drinks uniquely tailored to their tastes—all while Starbucks serves customers at scale across thousands of stores.

What makes Starbucks a classic case of mass customization is its balance between standardization and personalization. The core components are standardized and produced in large quantities, while their combination allows for the creation of unique and individualized orders.

On the contrary, I wouldn’t place CosMc’s in the same category simply because, instead of on-demand customization, the chain focuses on pre-set, unique drink options—such as “Sprite Moonsplash” and “Berry Hibiscus Sour-ade”—that appeal to a variety of tastes and preferences while offering customers additional, yet limited, personalization.

You may be wondering how mass customization differs from a custom shop.

A custom shop—think of a bespoke tailor or a small artisanal café—is typically focused on making each product from scratch based on the customer’s exact specifications. This process is more labor-intensive and less scalable, as it prioritizes individualized service over efficiency. Custom shops typically don’t benefit from economies of scale because each item is unique and often requires specialized labor, making mass production impossible.

In contrast, mass customization sits at the intersection of customization and scale. It involves creating a modular system of components that can be combined in various ways to meet individual preferences. For instance:

Modular Components: At Starbucks, syrups, milk types, and espresso shots—produced in large quantities—serve as interchangeable modules that can be combined to create countless drink variations.

Automation and Standardization: Starbucks and CosMc’s standardize the production of these modules, allowing baristas or kiosks to handle modifications quickly and efficiently.

Predictable Demand and Production: By tracking popular combinations, the chains streamline inventory and reduce waste, maintaining cost efficiency.

All this helps the firms achieve the following: 

Scalability: Mass customization enables scalability because it relies on pre-made, interchangeable components that reduce the need for specialized labor or extensive preparation—unlike a custom shop.

Efficiency and Cost: Mass customization lowers costs by standardizing the production of modular components. This approach keeps the price accessible for a broader audience. 

Speed and Accessibility: Mass customization ensures relatively quick turnaround times, as components are pre-prepared and modifications can be made on the spot. 

Consumer Experience: Mass customization provides a sense of individuality without the labor-intensive aspect. Customers of mass-customized services often select from a curated set of options and modify within limits.

But as Starbucks recently realized, there’s a limit to how much “customization” you can offer without losing the “mass” part. 

When Does Mass Customization Make Sense? 

The rise of customization, particularly in mature industries, has been widely explored in both the operations and marketing fields. 

Joseph Pine’s book argues that customization can drive value by enabling brands to meet increasingly diverse consumer demands. Pine outlines conditions under which mass customization flourishes, particularly in industries where consumers are willing to pay a premium for tailored experiences.

However, Pine also warns of the costs of customization—both operational and strategic. Starbucks’ drive for ultra-customization has led to longer wait times, higher operating costs, and sometimes, customer frustration. CosMc’s approach of offering pre-curated drinks sidesteps some of these challenges, appealing to a demographic that values novelty without complexity. The difference between Starbucks and CosMc’s speaks to a fundamental principle in Pine’s work: while mass customization offers a competitive advantage, it works best when it doesn’t overburden the operational system or dilute brand identity.

According to Pine, mass customization is a compelling strategy for mature markets, where competition on quality and price may no longer offer a significant advantage. Brands like Starbucks and CosMc’s appeal to a consumer’s desire for self-expression and personalization. This approach helps them stand out in a saturated market by offering unique, flexible experiences without the complexity of traditional custom shops.

Another angle is to think about mass customization as part of the evolution of industries. The Abernathy-Utterback model on the dynamics of innovation suggests that industries follow a cycle of innovation that shifts from product innovation (focus on quality) to process innovation (focus on cost and efficiency). Early in a product’s lifecycle, firms benefit from offering a range of choices as consumers seek quality and novelty. However, as the industry matures, process improvements and standardization typically drive profits more than variety does.

While the Abernathy-Utterback model doesn’t address mass customization per-se, we can imagine it as the next period after incremental innovation —it’s no longer possible to reduce cost, and both process and product innovation are saturated. This is where mass customization comes in: the same process creates the same product, and now customization is primarily superficial in terms of innovation and process modification. 

In Starbucks’ case, the firm faces the challenges of an industry at maturity. Its extreme customization model, which requires significant labor and time, clashes with operational goals like speed and consistency. This tension explains CEO Brian Niccol’s recent push to simplify Starbucks’ offerings. By paring down options, Niccol aligns with the later phases of the Abernathy-Utterback model, where focusing on streamlined processes becomes crucial for maintaining a competitive advantage.

Swatch’s Mass Customization-Like Approach: “Hard Variety” Through Modularity

The success of customization depends on balancing market demands (what customers want) and operational feasibility (what a business can efficiently deliver). Starbucks exemplifies a “market-side” approach, catering to highly individualized preferences. This strategy, however, strains operations as every modification requires extra labor and time. 

Swatch approached customization by offering a broad range of unique designs on an otherwise standardized platform. 

Until Swatch, most high-end watches were highly customized, the consequence of which was extremely increased costs and constant loss of market share to Japanese brands such as Seiko. 

Swatch’s innovation (and with it the entire family of brands in Swatch Group, such as Longines and Omega) was to embrace a modular approach, where the basic structure and mechanisms of the watches remained consistent across most models, but the external elements—colors, patterns, designs, and materials—were highly varied. This approach separates hard variety (the movement) from soft variety (the face and dial), and gives customers the feeling of a personalized, unique product without the need for each watch to be customized on demand. The key was that hard variety, which is costly, was not that relevant to customers, and soft variety, which is efficient to provide, was highly valued by customers. 

Below is the diagram for the current, widely popular MoonSwatch. 

The implications:

Standardization with Style: Swatch achieved economies of scale by producing watch movements and components in a highly standardized manner, keeping costs low and production efficient. However, each watch had a distinctive aesthetic, enabling Swatch to offer a wide range of designs while maintaining operational efficiency.

Targeting Consumer Self-Expression: Swatch’s variety aimed at allowing consumers to express their individuality, even if the product wasn’t individually customized. This goal aligned with mass customization’s emphasis on meeting diverse consumer preferences, albeit in a “curated” way rather than allowing each customer to fully customize their watch from scratch.

Seasonal and Limited Edition Models: Swatch introduced limited edition and seasonal collections, which gave consumers the sense of owning something exclusive or special. This approach mirrors mass customization’s ability to provide unique value to each customer, albeit through a carefully managed set of options rather than on-demand customization.

While Swatch embraced many principles of mass customization, it didn’t offer on-the-spot, individualized customization in the way that Starbucks or a Nike ID shoe might. Instead, it used what we could call “massive variety” within a standardized framework. 

Swatch opted for a hybrid model that differed from traditional mass customization in the following ways :

Pre-Designed Options vs. On-Demand Customization: Unlike many mass-customized products that are created or modified on demand (such as a custom-configured Dell computer or Starbucks drink), Swatch offered a range of pre-designed options that customers could select from. This approach minimized operational complexity but limited the customization potential for individual buyers.

Focus on Aesthetic Variation: Swatch’s emphasis was more on visual and aesthetic variation rather than functional customization. In classic mass customization, customers often alter functional aspects of a product to suit specific needs. Swatch’s variety was primarily about self-expression and style.

Swatch’s approach contributed to the evolution of mass customization by showing that companies could achieve variety and individuality through clever design and modularity without fully customized, on-demand production. It also highlighted that, in certain industries, providing consumers with a range of preset unique options can effectively meet the need for variety and personalization.

In this way, Swatch exemplified what we can call a ‘scalable variety approach’ rather than classic mass customization, which worked particularly well in consumer fashion markets where appearance prevails over functionality. Swatch also paved the way for other brands (like Apple with its varied iPhone colors, or Nike with its limited-edition sneakers) to offer a similar balance of standardized production and curated individuality, all while keeping costs in check.

In summary, Swatch was a mass customization story in spirit, using modularity and a high variety of pre-designed options to meet individual tastes within a scalable, cost-effective production model. It demonstrated that, especially in fashion-forward consumer markets, mass customization doesn’t always need to mean individual configuration but can sometimes be achieved through thoughtful, abundant choice.

CosMc’s aligns more closely with an operational-side strategy. By offering a set menu, it reduces customization complexity and speeds up service, appealing to consumers who want a unique experience without the burden of making too many choices. This approach is also similar to Swatch, which used predefined styles to offer variety without the need for on-demand customization.

Conclusion: A Latte to Think About

As customization trends continue, technology promises to ease some of the operational challenges Starbucks faces. AI-driven personalization tools could allow Starbucks to offer recommendations based on customer history and preferences, creating a streamlined, semi-custom experience without overwhelming baristas. For instance, customers might soon receive personalized suggestions, like “Your Usual Plus” or “Today’s Recommendation,” which leverages their preferences while keeping the order process efficient.

Starbucks and CosMc’s each illustrate different approaches to (mass) customization, reflecting broader trends in consumer demand and operational strategy. As Starbucks refocuses under Brian Niccol’s leadership, it may find that dialing back on customization will enhance its value proposition by improving speed and simplicity. Meanwhile, CosMc’s will capitalize on novelty, attracting customers who want curated variety without the hassle of customization.

For Starbucks and CosMc’s, the challenge is clear: offering individuality without sacrificing the core brand experience, delivering drinks that are “brewed to order” in a way that delights customers and supports long-term growth.

And if you’re asking my opinion?

Call me simple, but I’d rather be debating Ethiopian versus Colombian beans than toppings and syrups—too bad that’s not even on the table.