the history of starbucks

It seems that Donald Trump’s triumph in the US presidential election has encouraged entrepreneurs. If a few days ago we were talking about John McAfee’s candidacy, now it’s Howard Schultz who is considering the possibility of joining the Conquest of the White House as an independent.

As a business leader, Schultz has already earned the gold after being ranked among the most respected CEOs in the US: At the age of 64, a few months ago he announced his decision to step down as executive presidency and chief executive officer at Starbucks. A year earlier he had stepped down as CEO, succeeding Kevin Johnson. Gone was 36 years of struggling to create what he calls his dreams in his latest book, From the Ground Up, “particularly my desire to start the kind of business my father never had a chance to work. That dream became Starbucks, the global coffee empire.

The origins

The first Starbucks store opened in Seattle’s Pike Place Market 1971. It was the work of three partners: English teacher Jerry Baldwin, history teacher Zev Siegel, and writer Gordon Bowker, inspired by coffee entrepreneur Alfred Peet, the same person who accustomed Americans to drinking coffee in a cup instead of cans. Peet taught them his style of roasting before opening his first shop. Its activity focuses on the sale of coffee beans and ground coffee for home consumption.

Howard Schultz only joined the company in 1982, doing so as operations and marketing director for Starbucks when it had only four stores. A year later, in 1983, he traveled to Italy, fascinated by the tradition of its cafés. The vision was to transfer this branch model to America. “My conclusion was that we don’t just serve coffee, but create an environment where the intimacy of the relationship with space and the coffee experience can come to life,” he says in his autobiography.

The partners rejected the proposal, but far from abandoning his vision, he decided to leave the company and start his own chain of cafes under the name Il Giornale. In 1987 it already had a small network of three companies and at that time acquired the chain that they had started from their former bosses. Embracing everything under the maritime-inspired brand, the real Starbucks is born, named after one of the characters from the novel Moby Dick.

cruising speed

After taking the helm, growth is exponential. In 1990 Starbucks already had 84 stores and in 1992 165. This year coincides with the IPO. The first Starbucks outside of North America was established in Tokyo in 1996. The big step towards internationalization took place in 1998 with the takeover of the English chain Seattle Coffee Company with 60 branches at the time.

A sticky point in Starbucks’ global expansion was China, where the brand opened its first franchise in Beijing in 1999. In 2000, he opened a new facility, this time in the Forbidden City, prompting protests from the country’s institutions that did not think it appropriate to place an American icon in a sacred place of Chinese culture. The facility eventually closed, but it wasn’t an obstacle to halting the brand’s expansion in the country. In fact, the company currently has 3,300 branches in the Chinese market and has just announced an ambitious plan to double the number of cafeterias to reach 6,000 branches by 2022

But let’s go back where we left off. The other event Starbucks suffers in 2000 is that after the company’s acquisition and at cruising speed, the CEO feels his role no longer needs to be that of a helmsman. Howard Schultz decides to step back and dedicate more time to another of his passions: basketball. In 2001 he bought the Seattle Supersonics, an NBA team that would entertain him for 5 years.

The fight for survival

The fun won’t last long. After his exit, the chain continued to grow until 2007, when the numbers began to decline. According to some publications, Schultz then issued an internal statement to then-Starbucks CEO Jim Donald, warning him that “we made some decisions that, with hindsight, diluted the Starbucks experience and served our brand well.” The statement was leaked to the press and accelerated the price decline.

But whether they settled in or not, it also marked the beginning of the great global financial crisis of 2008. The clientele was polarized between those looking for cooler places and the other, the majority, looking for lower prices every time . . At that time, McDonald’s and Dunkin Coffee announced their entry into the sector.

There are those who find it so off-putting that Schultz stopped so much basketball and put the focus back on the company. But there are also those who see it as a crooked maneuver to demonstrate their leadership skills.

The fact is that in 2008 Schultz once again took over the position of CEO, and with a “mea culpa”. He admitted that the concept of the “Starbucks experience” as the company’s trademark had been watered down and that there were too many stores open in the US, so many that they were cannibalized. A rather subtle way of announcing the closure of 7,100 Starbucks in the United States, a measure passed on February 26, 2008 with the ensuing labor protests, including worldwide.

Yet paradoxical as it may seem, measures as drastic as the one just mentioned marked the beginning of the reinvention of Starbucks and the reinvention of Schultz as the genius capable of bringing the company back to health. The prescribed recipe was based on four fronts: halt growth in the US, close underperforming stores, revamp the Starbucks experience and continue global expansion. Well, salary increases and bonuses for managers have also been abolished.

Finally, at the beginning of 2010, still in the midst of the crisis, the changes began to be reflected in the results. Thanks to the internal restructuring process and the recovery of the economy, business is picking up again and the chain has already announced profits of 176.9% in the first nine months of fiscal 2010. From that moment it has continued until today, where the chain includes more than 29,000 establishments in more than 70 countries.

The committed company

The recovery in numbers was accompanied by an intense advertising campaign, both inside and outside the company. In 2011, Schultz published the book Onward: How Starbucks Fought for Its Life without Losing Its Soul, which is about exactly how Starbucks “fought for his life without losing his soul.” A survival story, but also a policy statement for understanding leadership, management and the business world.

The emotional part begins as the company’s communication strategy, which has accompanied it to this day. Commitment to fair trade, environmental model, support for social projects, one of the best employers in the world and most recently the introduction of an anti-prejudice training program against racism. These are some of the Starbucks sponsored campaigns that have promoted its image as an honest and committed company to society.

But Schultz didn’t neglect his employees either, who wanted to be guided by the company’s values. They say that after the crisis, an important awareness campaign was carried out for the employees of the chain, to make them more aware of how to deal with customers and the essence of the company, but also to make them feel that they were a big family. . In fact, Howard Schultz wanted to spare his employees many of the economic hardships Howard Schultz endured during his childhood.

I use God as a witness …

“I remember the picture of my father lying motionless on the sofa after his accident. The fear of not having health care did the same,” he says in his latest book. Shortly after his father’s death, Starbucks was one of the first companies in the United States to offer health insurance to all employees, including part-time workers.

“As a child, I also knew what it felt like to have no money. My parents never had anything, nor did they have any savings.” In 1991, Starbucks allows all employees to purchase stock, moving it into the “partner” category.

In connection with the economic struggles he was having to become the first college graduate in the family, Starbucks signed an agreement with Arizona State University to offer free study to the company’s employees in the United States. “For Spring 2019, more than 3,000 Starbucks Associates (employees) have graduated. Twenty percent of those who have participated in the program, like me, are the first in their families to go to college.”

“I never intended to build a global company. I set out to build a business my father never had a chance to work for. One that treats all people with dignity,” he says in the book. In short, the American dream that his mother instilled in him.