Sunday, June 17, 2007

Starbucks Loss of Theatre and the Howard Shultz memo


I’ve been meaning to pen this for some time now. A few months ago Howard Schultz, the Chairman of Starbucks, released a well publicized memo to the employees ( . First of all, I want to point out that Howard is correct that something is going very wrong with his child. He addresses several issues correctly including the ‘loss of theater’ at the stores. However, I think that Howard has COMPLETELY missed some of the most significant gaps that is driving away customers. One thing not mention in your memo is the most important aspect of the Starbucks experience: excellently trained staff who care deeply about the product they are pouring into my cup. The Starbucks experience once was a knowledgeable staff who took time to pour a shot and spend time watching the temperature of the frothing milk. What is so unfortunate is the quality is so incredibly varying. I’ve had lattes from Shanghai to Seattle and used to regularly hit the Starbucks bar at the airports or downtowns in cities who lacked any coffee culture. While it was never my first choice in Portland, Seattle, etc. it was a place I could go to get a reasonable latte. Now, the customer experience is so bad I have evolved to just skipping a drink on many a travel itinerary, preferring to wait until I get home or find something else, anything else, even a Nescafe machine behind a deli counter which seems to have trained their employees better than the ones I’ve become accustomed to being serviced by at Starbucks: apathetic individuals who seems to barely give you a glance let alone eye contact while you take your order. Additionally, the stores have become so full and confusing with such an array of crap it resembles a convenience store more than a coffee shop. A few coffee mugs and some CDs is fine ,but you have stuffed animals for goodness sake. Who does that? Also, I’ve repeatedly found your stores filthy. Most particularly, these are your airport locations, sticky tables, dirty floors, straw paper everywhere. In these stores you have really one option: full time person cleaning. That’s it. Sign up. Starbucks has moved from my third place to the last place I would go for a coffee. I have found the frappucinos fairly reliable, I guess its hard to screw those up. These are fine in the summer but not exactly my rainy winter drink of choice.

To contrast with my mostly US experience, I found the stores in Shanghai consistently fabulous. Now I wonder why that is? Could it be your simply paying more attention in your international role out of the cost of sacrificing US quality? Every day for 8 weeks I purchased at least one drink. I found the lattes consistent, reliable, and the staff friendly. The purchasing area and seating areas were immaculate and interesting. Orders were not lost, staff made eye contact and actually seemed interested in what they were doing. Additionally, they seemed to know what they were doing, which I just don’t see in the staff you have today at the US locations. I think there is an illusion that by installing those automated machines in your locations you have somehow roboticized the coffee process and that you can hire or train less because of these machines. Far from it. These machines seem to have tolerances and variability just as any machine (think the syrup adjustments in fountain drinks), however with these machines being more complicated they seem to have even more opportunities for variance than fountain drinks. I’ve had just as much variance in my drinks with the machines as I have without. Additionally, how the milk is frothed, temperatures, and how to pour it into the cup are all important factors. I’ve lost track the number of times I’ve had a barista just hold the milk under the frother for about 20 seconds and dump it into my cup over the espresso shots, slap a lid on it and toss it on the counter. If I wanted a giant warm cup of milk I would have asked for one thank you very much. I contrast this to World Cup, Common Grounds (best lattes on the planet), Ken’s, St. Honore, Extracto, Victrola, Bauhaus, or one several other locations who take time for each cup. Your short term approach to creating bottom line revenue growth is killing off your long term reputation. So, Mr. Shultz, while you have raised the alarm that something is wrong, I feel you have missed a few of the most important points and you are ultimately in the position to fix them.

My specific recommendation(s): challenge the people that work for you to be inspired to see something beyond a 21st century soda jerk. I believe you can make great strides in improving the experience through training and education of your jr. workforce. In addition to incentives around cleaning up some of the airport and other most filthy locations, bring in talented baristas with deep training and passion and send them throughout the land to infuse passion about your product. Send young, enthusiastic employees or consultants from the best coffee shops to visit places that lack a coffee culture to inspire and grow enlightened employees. Sponsor contests among employees for both quality and creativity.

There are enormous intangible benefits to this training. I realize pay is a factor in retention, but so is growth and opportunity. Let everyone in the company know there is a chance here to become a better person, a more cultured individual. Incent them with trips to understand the origins of the bean better. Trips to Seattle for a coffee college or a tour to see how the machines they use are built. Guest regional lecturers from the Starbucks travelling ‘coffee corp’. Let them know about educational and career opportunities. Don’t just tell them why they should care, SHOW THEM with actions that allow them to achieve what interests THEM. Only then will you return to your roots, providing your customer with a great expresso experience.
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