Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Howard Schultz. (Anthony Jenkins for The Globe and Mail)
Howard Schultz. (Anthony Jenkins for The Globe and Mail)

the lunch

For Starbucks’s Howard Schultz, a sip of retirement was more than enough Add to ...

The son of working class parents in Brooklyn, N.Y., he grew up in public housing, managing to escape in 1970 with a football scholarship to Northern Michigan University.

After graduation, he found work in sales and marketing at Xerox Corp., then as an appliance salesman for a company that sold European coffee makers. He noticed that he was selling more of them to a fledgling Seattle company called Starbucks than to the major department-store chain Macy’s. He took a job at Starbucks as head of operations and marketing, but it was on a business trip to Italy that he decided to bring the romance of Italian espresso bars to the United States.

With the help of Christine Day, the outgoing chief executive of Lululemon, who was a financial adviser on private placement offerings, he launched his own coffee company, Il Giornale, opening two espresso bars in Seattle and one in Vancouver.

In 1987, he acquired Starbucks and kept the name, with 11 stores in all.

Ms. Day joined the company officially, putting her future in the hands of a man who “believed people would spend $2.50 for a cup of coffee when you could get drip coffee at 7-Eleven for 50 cents,” she said earlier this year.

By 2000, with Starbucks in solid shape, Mr. Schultz stepped down as CEO to focus on global strategy and expansion as chairman. But by 2007, the chain began to falter, obsessed with growth and distracted from the core coffee business. The financial crisis hit, the digital revolution arrived and an onslaught of new coffee competitors squeezed Starbucks.

“When it comes to Starbucks, I take every threat very personally,” Mr. Schultz writes in his 2011 book, Onward: How Starbucks Fought for its Life Without Losing its Soul. “Starbucks is in my blood. It is such a part of me that letting it unravel simply was not an option … As chairman, I held myself responsible for the problems we ourselves had created … I knew that, without daily control of the business, I was essentially powerless to stop Starbucks from sinking.”

During a vacation to Hawaii in 2007, as he was contemplating retaking the reins at Starbucks, he spoke with his pal Michael Dell, founder of the eponymous computer company, who had just returned to the top job at his company.

At the time, Mr. Dell shared with him his own “transformation agenda.” It became a call to action for Mr. Schultz, helping him realize the scale of change and precision decision-making needed at Starbucks.

He returned in January, 2008, and on Feb. 26, closed 7,100 U.S. cafés for three hours in the afternoon to retrain baristas in the art of making the perfect espresso.

Taking control is an operating principle for Mr. Schultz, whether it’s the quality of the coffee Starbucks serves, or the way its distinctive beans are distributed.

Now that the company is back on firmer ground, Mr. Schultz has been adding more complexity to the operation, acquiring upscale companies such as La Boulange bakery and Teavana – an attempt to do for tea what Starbucks did for coffee.

“We’ve been selling food for 30 years,” he told a conference call last month. “It just hasn’t been as good as our coffee. Now our food is as good as our coffee and we have a story to tell.”

It’s a story that’s helped fuel Starbucks’s sales growth at stores open a year or more: They rose 8 per cent in its key U.S. market in 2013, compared with 1.3 per cent gains at Tim Hortons’s U.S. restaurants so far this year and 0.9 per cent in its Canadian stores.

For Mr. Schultz, it means Starbucks is “a 24-hour job,” he says.

“The only time that I’m not thinking about Starbucks is when I’m sleeping.” Even then, he probably is, he adds. “I’ve never said that before, but it’s true … I think when you love something like this there’s a deep responsibility that goes with it.”

Family is important to him, but he doesn’t talk much about it. Daughter Addison is a graduate student studying social work in New York, son Jordan writes about sports for the Huffington Post.

Report Typo/Error
Single page

Follow on Twitter: @MarinaStrauss

  • Starbucks Corp
  • Updated May 26 4:15 PM EDT. Delayed by at least 15 minutes.


Next story




Most popular videos »

More from The Globe and Mail

Most popular