Tweet

Thinking Outside the Cup: Starbucks Is Borne

Article Overview: “It wasn't until I discovered Starbucks that I realized what it means when your work truly captures your heart and your imagination,” said Schultz.

Thinking Outside the Cup: Starbucks Is Borne

“It wasn't until I discovered Starbucks that I realized what it means when your work
truly captures your heart and your imagination,” said Schultz.

After being rebuffed by the owners of Starbucks for his idea of taking the company in new directions, Schultz decided to leave and start a company of his own. He approached numerous investors for financial backing until he finally found support for his project. Several Starbucks partners were even willing to invest in him. In 1984, Schultz opened Il Giornale coffee bar in Seattle.

Il Giornale was Schultz’s takeoff of the Italian espresso bar concept he had fallen in love with in Milan. It was a small, friendly café, which soon became a popular gathering place for the Seattle sophisticates. As its popularity took off and Schultz planned for the expansion of his chain, he heard a rumor that one of the Starbucks partners wanted out of their business. He immediately seized the opportunity and put together a group of investors to make an offer, one of whom was Bill Gates, Sr.

In 1987, Schultz bought out all the partners of Starbucks for $3.8 million and merged Il Giornale and Starbucks to form the Starbucks Corporation. From that point on, there was no looking back for the company. Once Schultz took the helm of the company, he set about making his dream a reality. He created a relaxed and comfortable atmosphere, where customers could not only enjoy a basic cup of coffee but could enjoy an entire experience. He also instituted one of the most thorough training programs and compensation packages for all his Starbucks employees.

Schultz continued its steady expansion, immediately opening their first outlet outside of Washington State. After five years, the company went public and growth continued throughout North America. It then began expanding overseas, opening outlets in Japan. By 1992, there were 165 Starbucks locations; just two years later, there were 425. Sales increased from $100 million in 1993 to $465 million in 1995. New stores continue to open up around the world; 1,500 new stores were planned for 2006.

Starbucks is the number one specialty coffee retailer in the U.S. Schultz succeeded in creating a nationally recognized brand and creating a loyal culture of premium coffee drinkers. He popularized the café latte, the frappuccino and other specialty drinks. In 2004, Starbucks was ranked number eight on Fortune magazine’s list of “America’s Most Admired Companies.” Today, there are over 10,000 Starbucks stores in over 30 countries.

Following from his love of sports, Schultz was also the owner of the NBA’s Seattle Supersonics until recently, when he sold the team to investors from Oklahoma City for $350 million. He also owned the WNBA’s Seattle Storm and is a partner in Jamba Juice, a chain of smoothie restaurants with over 500 locations throughout the U.S.

From the blue-collar life in the projects to an estimated net worth of $700 million, Schultz also continues to stay true to his roots by giving back to the communities that support him.

Related Articles
 
  Get Naked and Grow Your Green Business Today!
  Starbucks Coffee Shops
 
  Starbucks Barista

Article Tags: bill gates, caf, coffee bar, compensation packages, cup of coffee, espresso bar, gathering place, helm, il giornale, imagination, italian espresso, milan, new directions, sophisticates, starbucks, starbucks corporation, starbucks locations, steady expansion, takeoff, washington state



Related Forum Posts
Starbucks: Licensing vs Joint-Venture - Hello there i have a few questions, i would like to hear from you some ideas and opinions for my case study... 1) Why do you think Starbucks has recently elected to expand internationally primarily through local joint-ventures, to whom it licenses its format, as opposed to a pure licensing strategy? 2) And I was also wondering, what are the advantages of a joint-venture entry mode for Starbucks over entering though wholly owned subsidiaries? On occasion, Starbucks has chosen a wholly owned subsidiary to control its foreign expansion, e.g. uk or thailand? why? 3)And which theory of FDI best explains the international expansion strategy adopted by Starbucks? Thanks for helping me... Best Guy
Re: Why isn't Starbucks instant coffee selling? - I believe that's their strategy... Starbucks is making breakfast sandwiches and bagels now. They're definitely preparing for battle. Maybe there will be Starbucks Diners in the future?
The Starbuck's experience - [quote="Sebastien":3j66y8cv]Being French, I don't really understand what you call the Starbucks experience. We didn't have coffee shops in France until a couple years ago when (surprise!) Starbucks came in. So what's the Starbucks experience? Waiting in line 10 minutes for a cup of coffee? haha I think I understand what you're saying though. I think Starbucks has had tough competition lately with a bunch of coffee shop brands popping up and this is a natural move away from their core business (an actual coffee shop). We're seeing that Starbucks are actually not as profitable as everybody thought. As a side note, I've always said that some day there will be a huge financial scandal about Starbucks. A company just can't grow that fast in a healthy way. Anyways. So Starbucks is calling back founder and old CEO (I'm too lazy to look up his name on Google) to put Starbucks back on track and these vending machines might be some of his first projects. I think it is great to take advantage of such a good brand and do extend it further than a coffee shop.[/quote:3j66y8cv] Hi Sebastien, According to branding expert Martin Lindstrom, "Starbucks' objective is to create an intimate and even romantic atmosphere...The lighting is subdued to keep it cozy. The chairs and floor may be a little scuffed, but that makes it feel comfy and homely, and less intimidating...The music is soothing and sophisticated" (BRANDsense 158). So the Starbucks experience is essentially founder Howard Schultz's recreation of the coffee bar culture in Milan and the reason why they feel they can charge people outrageous prices for coffee. In fact, Starbucks isn't selling coffe, they're selling a unique and memorable brand experience to their customers.
New McDonalds McCafe concept... - It will be interesting to see whether this idea takes off in Japan. Here in Hiroshima there are at least 4 Starbucks that I can think of, and probably more, and several MacDonalds... as well as a lot of home-grown competition. Of course, MacD already sells coffee, and I'm not sure that expanding will dent Starbucks because I guess they appeal to different market niches... Could hurt MadDonalds more...
Re: Advantages with Social Media Sites - Social Media sites make good business for you, if you know how to use them. I learnt that Starbucks has more that 20 million likes on Facebook. This shows that it is easy for Starbucks to interact with these people. Lady Gaga has 17 million followers on twitter. She can market to them easily with a singe tweet.


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Tweet

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

Providing Feedback

Why SEO is important for your online success

Smart & Simple Internet Techniques

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.