Starbucks CEO Details Chain's Return to Success

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Starbucks CEO Details Chain's Return to Success

By Angela Hanson, Convenience Store News - 05/21/2013

CHICAGO -- In the eyes of some, success in the business world means choosing profits over values and the wellbeing of others. But in the eyes of at least one widely regarded business leader, Starbucks Corp. Chairman, President and CEO Howard Schultz, success means exactly the opposite.

On the second day of the 2013 National Restaurant Association (NRA) Show, Schultz delivered the keynote address and reflected on the founding values of Starbucks, which have prompted the coffeehouse chain to look after its employees just as much as it focuses on making money.

Decades ago, Starbucks made the commitment to provide benefits such as health insurance to full- and part-time workers, something Schultz said stemmed from a time when his father suffered an injury that seriously impaired his ability to earn a living for his family. The "greatness and promise of the entrepreneurial dream" gave him the ability to build a company his father never had the chance to work for, Schultz explained.

While Starbucks surged to incredible success as it went from 11 stores in 1987 to thousands today -- enjoying a "magical carpet ride" -- it also lost sight of the things that mattered and focused on the company’s stock price instead, according to Schultz. Although many see the Seattle-based company as an unstoppable coffee juggernaut, when the economic crisis hit, Starbucks faced the previously unthinkable possibility of becoming insolvent.

To change that, Schultz brought all of Starbucks’ managers together in a massive company meeting at the cost of $32 million to refocus on what the company wanted to be. Starbucks briefly closed every store and retrained its entire team to begin focusing on each individual customer again, rather than large numbers and stock prices. This was especially important in a time when consumers were playing it financially safe and Starbucks offered a product that was completely discretionary.

At the same time, Schultz noted that it is important to do more than play it safe. "Innovation is not a line extension; innovation is disruptive," he said.

Another part of Starbucks' return to success has been its recommitment to social values, according to Schultz, who noted that customers want to support companies whose values align with their own. People can't wait for politicians in Washington, D.C., to take care of everyone's problems because that isn't going to happen, he said. It's up to individuals and companies to do more for their communities, while still reaching for profitability. Starbucks itself is proof that it can be done.

"We are all personally responsible and accountable," Schultz stated.