In an interview with The Seattle Times following Wednesday's earnings announcement, chairman and CEO Howard Schultz talked about everything...
In an interview with The Seattle Times following Wednesday’s earnings announcement, chairman and CEO Howard Schultz talked about everything from job cuts to his health. Here are excerpts from the interview:
Cutting stores and jobs: We are taking the very tough decisions that are painful and difficult to make. But in terms of long-term value positioning — for fiscal ’09 and beyond to be the kind of years they’ve been in the past — these are things we need to do. … It’s not fun, and I would rather not be experiencing it, but … (it) will ultimately make us a much stronger company.
Fewer customer visits: Our customers are not turning away from Starbucks because they’re unhappy or they have lost faith or they don’t like the experience. … They just do not have the disposable income to come as often as they once did. They’re either not coming as often, or cutting out the occasion — having coffee in the office, having coffee at home.
Economic hard times: Sometimes living in Seattle, we’re not as aware. You look around Seattle, and there are cranes everywhere building new office buildings and residential buildings and all these condos. If you travel around the country as I do, there’s a very different level of concern and pressure on the consumer that perhaps at times is not as apparent in the Northwest.
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Starbucks’ hard times: This is a long story, and unfortunately the current chapter is not a positive one, but I think when people look back at this time they will recognize that the people who wrote Starbucks off were very shortsighted.
Spreading economic woes: There are some signs that perhaps the U.K. and parts of Western Europe are demonstrating similar economic clouds on the consumer that we began to see a year ago in the U.S. In view of that, we want to be very cautious on expanding into that storm.
Closing most of Starbucks’ Australian stores: Australia is a market that has extremely high rents and very expensive labor rates… Some of the real estate that was chosen there in the early years perhaps was a little bit too aggressive.
Successful international markets: The pent-up demand and the unaided awareness of Starbucks in these places is pretty extraordinary. In Argentina, we can show you a picture where the wait time is over an hour even today, a month after opening.
Upcoming leadership conference for 10,000 people in New Orleans: It is expensive, but it is an important investment that we want to make in our people… We are preparing for that in ways we haven’t before to ensure the value of bringing 10,000 people together… (It) is not a party, it’s not a convention, it’s a working three-day session… In years past we have gotten a bounce out of those conferences in terms of sales, because our people are so excited.
Not becoming McDonald’s: Unlike a fast-food restaurant or a quick-service restaurant, we don’t want to get into the game of happy meals and deep discounts. We want to leverage those assets that we have that are consistent with the brand position at Starbucks, and we think the Starbucks Card is the perfect place.
His health: For the past year, I have been on an exercise and diet plan, and then I became a cyclist. So I’ve lost weight, but I’m fine…. I’m totally fine.
Bouncing back: When Apple was on its heels, which was not that long ago… the bloom was off the rose, and people wrote Apple off. Then a couple years later, they’re in a new business that no one ever predicted, and it has a halo on the entire company.
Rather than predict what we’re going to do, I would rather demonstrate it. It’s not about words, it’s not about press releases, it’s about showing up and doing the work and the things we need to do to resonate with the customers.