Did Starbucks founder revolutionise the coffee industry?
The coffee chain Starbucks is a familiar sight on almost every high street, where it enjoys a global presence in around 80 countries.
One man, Howard Schulz, is credited for turning this small Seattle-based coffee house into one of the world’s biggest and most recognised brands.
Humble beginnings
Howard Schulz was born in 1953, in Brooklyn, New York. His upbringing wasn’t easy – his family were plunged into poverty after his father suffered a workplace injury that left him without any financial support.
After a series of unfulfilling jobs, Howard took a role at a business selling homeware products. He climbed the ranks to become vice president. When a local coffee shop in Seattle, named Starbucks, ordered a vast number of coffeemakers from the business, Howard decided to visit the owners, Gerald Baldwin and Gordon Bowker, to find out more.
The birth of Starbucks
Established in 1971, Starbucks had just three stores at the time, but Howard was impressed by the enthusiasm the owners’ displayed for selling a niche coffee product. In fact, Howard persuaded them to take him on board.
When Howard took a work trip to Milan a year later, he was taken aback by the number of espresso outlets and the range of coffees on offer. Most importantly, Howard noted how Italian coffee shop owners knew their customers by name. It was this relationship that people had with their coffee that became the fundamental ethos of Starbucks’ future.
However, the Starbucks’ owners weren’t taken with Howard’s idea to inject an Italian-inspired experience into their brand. Undeterred, Howard left Starbucks in 1985 to pursue his dream of creating a coffee shop akin to those he’d seen in Milan, which would also offer high-quality coffee to the mass market.
However, it seems Starbucks was in Howard’s blood, because just a couple of years later he bought the chain from the founders for $3.8 million.
The rise of Starbucks
When Howard became CEO of Starbucks, there were just six stores, but rapid expansion followed. By 1992, the chain had 165 stores, with revenues toppling $93 million – and it wasn’t long before interest in the brand piqued overseas.
Some eight years later, Starbucks was a global name with 3,500 outlets and a healthy income of $2.2 billion.
Recipe for success
Howard’s idea of replicating Italy’s coffee culture and focusing on the personal element of drinking coffee was indeed a recipe for success for Starbucks. Customers liked the sophisticated nature of their coffees, with exotic words such as grande and venti used to describe the new breed of lattes.
Other factors also contributed to the brand’s meteoric rise. Howard wasn’t just interested in the bottom line. His brush with poverty during his formative years and the financial injustice of his father’s work injury gave him a huge affinity with his employees.
Howard not only offered his staff (which he called his partners) generous wages, he also gave them full healthcare cover, stock options and educational opportunities. He promoted aspects such as social welfare and diversity and spearheaded initiatives to employ ex-military personnel and disadvantaged young people.
Sustainability is also at the heart of the Starbucks brand, with 99% of its coffee now being ethically sourced. In a bid to reduce waste, the brand is on target to donate 50 million leftover Starbucks meals to foodbanks by 2021.
Today, there are more than 30,000 Starbucks outlets across the globe, generating net revenues of over $22.4 billion.
After three decades revolutionising the coffee industry, Howard has since stepped down from his role as CEO, but he still owns 3% of Starbucks stock and enjoys a net worth of around $3.4 billion. With his political aspirations, there are rumours that his next move is to run for office!
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