Howard Schultz, 57, is the chairman and CEO of Starbucks. He originally bought the company, then simply a purveyor of high-quality coffee beans, in 1987 and went on to transform it into America's — and the world's — leading coffeeshop chain: Starbucks currently has more than 16,000 stores in 54 countries and annual revenue of more than $10bn. Having stepped aside from the CEO role in 2000, Schultz famously returned as chief executive in January 2008 after a slump in sales. He tells the story of the subsequent turnaround in his recently published book, Onward: How Starbucks Fought for its Life Without Losing its Soul.
How's business?
Despite the fragile nature of the economies around the world, business is quite good. We had the strongest year in our history in 2010 and the last two quarters were consecutive record quarters for the company. So we're quite pleased. But at the same time we need to be extremely thoughtful and disciplined about what we're doing because of the nature of the world we're living in. Unemployment in America is still nine per cent, and in the UK it's eight per cent.
Is it fair to say that China is the biggest area of potential growth for you at the moment?
We have 800 stores in greater China and about 400 on the mainland, and it's a fantastically strong market for us. The Chinese have embraced Starbucks as their own and are using our stores literally as a third place between home and work. Given the emerging middle class and how aspirational they are and their understanding of western brands, we have a very significant opportunity to have thousands of stores in China and I'm quite excited by that.
Despite the fact there's no tradition of drinking coffee in China?
Not unlike Japan and most of Asia, these are tea-drinking consumers, but in a very short period of time — we've been in China 12 years now — we have created an understanding of coffee. If you walk into one of our stores in Beijing you will see exactly what you see in London, and that is people enjoying coffee, socialising, having meetings. People are still drinking tea but the coffee category is growing and we're going to be a big part of it.
When you returned as CEO, there was a sense that the company had been trying to grow too quickly. What's the difference now?
The kind of growth we're talking about right now is different. It's not growth to try and hit a number or satisfy any constituency other than our customers. We've learned some lessons and put in place new processes to ensure there's a tremendous amount of analysis both before and after decisions, whereas in the past, when we were involved in hypergrowth, very rarely did we look back, we were always looking forward.
What's so special about coffee?
It's a social beverage, it brings people together. I had an epiphany in 1983 walking the streets of Milan and Verona. I was struck not just by the romance of Italian espresso but also by the sense of community that existed in the cafés. It was through that experience that I realised what an opportunity existed, because there was nothing in America like the English pub at the time, there was no social place. The question was, could we create an environment around coffee?
You've recently been very vocal on the subject of the price of coffee on the commodities market. Why is that?
Coffee's at a 34-year high right now and there is no evidence whatsoever of a supply or demand issue driving that. The question I would ask is: who's benefiting? In the middle of all this is a litany of different types of very sophisticated financial speculation. It reminds me in a way of the subprime mortgage crisis in America. Perhaps we haven't learnt our lesson.
How has your background informed your business career and your business values?
I grew up in Brooklyn, New York. My dad had an accident when I was seven years old, and as a result he was fired. In those days, if you were an uneducated blue collar worker in America and had an accident, there were no benefits or health insurance. So at the age
of seven I witnessed a kind of fracturing of the American dream. In a way, the vision for Starbucks was to create the sort of company that my father never got a chance to work for, that would value the worker. That precipitated two unique benefits that had never been created in America before: stock options and health insurance for every employee.
What are the main lessons you've learnt over the last two or three years about turning a company round?
You've got to have the right strategy and you have to have great execution. But it's really about human behaviour and it's about leadership. We're not in a business that's technology based, we're in the people business and leading an organisation that's so people based means that everyone has to have a reason to believe, everyone needs to be faced in the same direction, and everyone needs to understand that it's not about thousands of stores, millions of customers or thousands of employees, it's about one person and one extraordinary cup of coffee and one customer.
I also think transformation doesn't have a finish line and success is not an entitlement, it has to be earned. So we're not celebrating. We still have a lot to do.
How much longer will you remain as CEO?
I've told the board and our shareholders that I'm here for the long term and won't be heading out any time soon. Although I'm not sure that's what my wife wants to hear.
Finally, what's your favourite cup of coffee?
My favourite coffee is Sumatra made in a French press. But I have to make it myself!
Onward by Howard Schultz is published by Wiley, £14.99
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