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The Starbucks Stops Here

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from: Bonnie Goldstein

Posted Friday, March 9, 2007, at 5:12 PM ET

Starbucks is one of the fastest-growing brick-and-mortar corporations in the world. During the past decade it expanded from 1,000 stores to 13,000. Yet the company ethic, Seattle-flavored and vaguely New Age-ish, has always been to think of Starbucks as more than just another retail chain. Starbucks baristas have been encouraged to take a craftsman's pride in their product, and the company has strived to furnish a racially diverse and ecologically sustainable gathering place to "enthusiastically satisfied" customers away from work and home. Lately, though, even chairman Howard Schultz has noticed that the brand has become "commoditized."

In a Feb. 14 memo to top company managers (see below and on the following page), Schultz lamented the cumulative effect of company decisions associated with expansion. Using more efficient "automatic espresso machines," he bemoaned, diminished the "romance and theater" of the earlier-era La Marzocco machines (misidentified in the memo as "La Marzocca"). The faster machines block "the visual sight line the customer previously had ... for the intimate experience with the barista." Stores designed "to gain efficiencies of scale" and to "satisfy the financial side," Schultz elaborated, "no longer have the soul" nor the "warm feeling of a neighborhood store." Schultz, the author of Pour Your Heart Into It: How Starbucks Built a Company One Cup at a Time, concluded that "we desperately need to look into the mirror and realize it's time to get back to the core ... to evoke the heritage tradition and … passion" for the "true Starbucks experience."

The coffee and mug purveyor has lost 8 percent of its value on Wall Street since Schultz's Valentine's Day cri de coeur became public. But stock analysts assure customers that the chain is thriving. Columnist Joe Nocera opined in the New York Times that Schultz's regrets rang hollow because he "signed off on these very compromises he complained about, precisely because they would help the company grow faster." Schultz more or less conceded the latter point in his memo.

The document leaked Feb. 23 to Jim Romenesko, who in addition to presiding over a well-known media gossip site maintains StarbucksGossip.com. Starbucks confirmed the memo's authenticity. Perhaps Schultz intended the much-discussed e-mail to remain private among a handful of executives, but one can't help wondering whether it was intended as a publicity stunt for customers or as a St. Crispen's Day-style rallying cry for Starbucks baristas and ex-baristas worldwide. It has certainly struck a chord with the latter group. "This communiqué has captured my own personal feelings," commented one Boston store manager.

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hot document
entries
12
from: Bonnie Goldstein

Posted Friday, March 9, 2007, at 5:12 PM ET
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Bonnie Goldstein is a former special investigator to the U.S. Senate and investigative producer for ABC News.
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