Thursday, October 3, 2013

Starbucks Refuses to Accept the Status Quo

In an interview with the Wall Street Journal. Starbucks chairman Howard Schultz, self-confessed "not a coffee person", reveals new directions his company plans to take in the coming years. The recent acquisition of pastry company La Boulange and addition of custom-concocted fizzy drinks are part of a new emphasis on Starbucks moving beyond just being the corner coffee takeout place. 

Schultz' vision for the company dates back to his purchase of a small coffee bean company with the idea of turning Starbucks into the American version of a European cafe, where patrons drink, eat, meet and hang out.  It's a third place beyond home and work for people to feel relaxed and comfortable spending their time.

Hunter Communications Original News Source:
The Wall Street Journal

Link to article:
Howard Schultz: What's Next Starbucks?

Excerpt: "Under Mr. Schultz's leadership, Starbucks has become a global consumer brand that isn't only a coffee shop but increasingly an all-day restaurant, design concept and health-food conglomerate. Mr. Schultz is the first to admit that rapid growth caused the company's crash a few years ago. He's determined not to let that happen again. 'In 2006 and 2007, I think growth covered up a lot of mistakes,' he says. 'Hubris and a sense of entitlement set in.'

Today Starbucks has more than 19,000 stores world-wide, including over 11,000 in the U.S. Thousands more are planned in Latin America and Asia combined. But Mr. Schultz is set on expanding their scope. 'We cannot be content with the status quo,' he says. 'Any business today that embraces the status quo as an operating principle is going to be on a death march.'

For one, Starbucks will be rolling out a series of new offerings in an effort to turn what used to be primarily a morning business into an all-day cafe. Some stores serve wine and many have started selling dishes with healthy fare like quinoa and kale.

The company plans to introduce some new design concepts, including a modern, modular drive-through made from reconfigured shipping containers. A drive-through window will be a part of 60% of the 1,500 new U.S. stores that are planned for the next five years. There will also be new "coffee tribute" locations, such as the recently opened Kerry Center flagship in Beijing, a two-story store with coffee bars, contemporary furniture, locally sourced Chinese artifacts and a series of coffee workshops. And last week the company announced the opening of a store within the Parisian shopping center Galeries Lafayette, as part of a planned move into more retail spaces.

They are all part of Starbucks' recent efforts to extend its reach beyond coffee. In 2011, it bought the juice company Evolution Fresh for $30 million, and together they recently rolled out a new food and beverage line. Since then, Starbucks bought the San Francisco-based patisserie La Boulange for $100 million and the tea company Teavana for $620 million. And it has joined with the French corporation Groupe Danone to launch a line of Greek yogurt products.

Mr. Schultz doesn't think this kind of growth will result in the same problems as the company's past spurt did. 'These are all businesses we are already in, and these acquisitions will enhance our position as long as there is a heavy level of discipline and rigor attached to decisions,' he says. In the near term, he says that he isn't planning to make any more acquisitions. However, he says, 'I think there will be more strategic partnerships.' "

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