Rising Starbucks

While others were slogging through the recession, Starbucks apparently got its mojo back, reports Claire Cain Miller in the New York Times (1/21/10). This was supposed to be a time when we were giving up the lattes along with other luxuries, but at Starbucks, in the first quarter, net income went up by $64.3 million, revenue rose by four percent, as did same-store sales. Over the past year, Starbucks "stock has nearly tripled to $23.29, though that is still significantly below the record high of nearly $40 in 2006."

Starbucks chief Howard Schultz, who returned to the company two years ago, suggests this is just the beginning of a revival that returns to the company’s roots. "We lost our way," says Howard. "We went back to start-up mode, hand-to-hand combat every day." After closing stores and laying off workers, his goal was to get his people "to think like employees of a scrappy little company that just wants to serve a good cup of coffee." This meant buying coffee beans in smaller batches, and tailoring drink menus by region, for instance.

It also meant re-designing stores to achieve a certain "local-ness." For example, at Starbucks stores in Seattle’s Capitol Hill neighborhood, "bunches of wildflowers sit in mismatched jugs on tables found in antique shops. Beans are ground to order and poured through a cone like those used in artisinal coffeehouses. On the outdoor patio, coffee grounds are piled in a bucket with a handwritten sign encouraging neighbors to take them for composting their gardens." Howard plans more of the same in more cities. "I think we’ll be able to scale this in a similar fashion at a lower cost," he says.