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Text B
Building the dream of Starbucks
1 Howard Schultz is not a household name to most North Americans, but those living in urban or suburban communities know his company: the specialty coffee retailer Starbucks. With impressive velocity, Starbucks has grown into the largest coffee roaster and retailer of specialty coffee in North America in a span of only a decade. By 2000, its coffee houses could be found in more than 3,000 locations worldwide; even President Bill Clinton was seen in a snapshot with a Starbucks brew in his hand. According to the US weekly magazine, Newsweek, Schultz's merging of the three Cs — coffee, commerce and community — surely ranks as one of the '90s greatest retail successes.
2 Schultz was born in 1953 and grew up in an extremely poor section of the Brooklyn borough of New York City. His mother worked as a receptionist, and his father held a variety of jobs, none of which offered decent pay or medical insurance. When Schultz was seven, his father lost his job as a delivery driver when he broke his ankle in an accident. In the ensuing months, the family was literally too poor to put food on the table.
3 During his youth, Schultz was hounded by the shame of his family's "working poor" status. He escaped the hot Brooklyn summer one year to attend camp, but would not return when he learned it was for low-income families. He was teased by boys in high school and ashamed to tell his girlfriend where he lived. The harsh memories of those early times stayed with him for the rest of his life.
4 Sports became an escape from the shame of poverty. Schultz earned an athletic scholarship to Northern Michigan University in 1975. He was the first person in his family to graduate from college as none of his predecessors had training beyond vocational school.
5 The bud of inspiration for his phenomenal coffee business began growing in a 1983 visit to Milan, Italy. Schultz conceived of a new American way of life in the coffee bars of Milan. He sought to recreate such forums for people in the US to start their days or visit with friends. In 1987, at the age of 34, Schultz organized a group of investors and purchased the company that had formerly employed him, the Starbucks Coffee Company in Seattle, which he restructured as the Starbucks Corporation.
6 The public verdict was overwhelmingly positive. Schultz's premium coffee bars were an instant success, acting as a stimulus of rapid growth and expansion not only for Starbucks but also for the coffee industry around the world. In 1992, Starbucks became the first specialty coffee company to go public, affirming its magnitude and prospects.
7 Starbucks' first major venture outside of the northwestern part of the nation was Chicago, where the company's specialty sales division developed new business with department stores and established Starbucks coffee bars adjacent to the business sections in national bookstores. Starbucks also formed a partnership with PepsiCo to create and distribute a new ready-to-drink coffee-based beverage, and entered into a licensing agreement with Kraft Foods. As a company seeking to develop with a multilateral approach, Starbucks even developed a relationship with the music industry to sell Starbucks-tailored CDs ofclassical brass and orchestral music in the coffee bars.
8 When Starbucks opened its first store in New York City, it was a homecoming for Schultz, but he did not act like the head of the reigning royalty of coffee he had become. The New York Times commented, "The soft-spoken Mr. Schultz has barely a trace of a New York accent and a timid, almost apologetic manner."
9 Schultz has also attracted considerable attention with his unconventional employment policies. He wanted to give Starbucks' employees both a philosophical and a financial stake in the business. He decreed that employees who worked the quota of 20 hours a week or more were eligible for medical, dental, and optical coverage as well as forstock options. At a time when other companies were trimming benefits as a cost-cutting measure, Schultz,who grew up in a family without any medical coverage, was vocal in his belief that genuinely caring about your employees is critical to building a sturdy workforce. "Service is a lost art in America," he told The New York Times. "l think people want to do a good job, but if they are treated poorly they get beaten down. We want to provide our people with dignity and self-esteem, and we can't do that with lip service." Starbucks stipulates that every employee with at least half-time hours can receive health-care benefits. Schultz credits the utilization of such a benefits policy as the key to the company's growth because it has given Starbucks a more dedicated workforce and an extremely high level of customer service. The chain also achieved a dramatically low turnover rate, half that of the average fast food business. This creates a significant numerical payoff for Starbucks, since each new employee represents an expenditure of $3,000 in recruiting and training costs and productivity losses.
10 Schultz has remained firmly committed to employee and community enrichment, aphilosophy which is embedded in the verycore of Starbucks' business culture. He has never grown accustomed to success enough to forget his working-class roots. He dedicated his book to the memory of his father, whom he had once spoken harshly to and accused of a lack of ambition. They were words Schultz would regret the rest of his life, a reminiscence he wished he could scrub from his memory. His father received the diagnosis of lung cancer and died before his son became a millionaire. Schultz once told his audience that his crowning success was that "I got to build the kind of company that my father never got to work for."
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Culture notes
PepsiCo: an American multinational corporation headquartered in New York. It mainly concentrates on the manufacturing, marketing and distribution of grain-based snack foods, beverages, and other products.
Kraft Foods: an American company that adopted the name Mondelez lnternational lnc. after spinning off its North American grocery business into a separate company called Kraft Foods Group Inc. in 2012. Mondelez International lnc. produces various kinds of food and beverage. The company is headquartered in Deerfield, Illinois.
The New York Times: a popular American daily newspaper founded in 1851 and continuously published in New York City ever since.
