A Good Return on Coffee

From the time of its offering in 1992 up until 2006 Starbuck’s provided a total return of 5,814 % to its shareholders. Since the end of 2006 the return hasn’t been quite so strong. In fact the return since 2006 has been a negative 52%. Howard Schultz is no stranger to struggles and the current performance of the Starbucks stock does not worry him. He recognizes the need for change but he replies to questions about the performance with the statement that “It was a false indicator when high and it’s equally as false now.” He says that on a day-to-day basis he is more concerned about the price of coffee than he is about the price of the company stock.

Howard Schultz, the Xerox Salesperson…turned kitchenware’s salesperson…who eventually convinced the original 1971 founders of a company called Starbucks into hiring him. That year was 1982. At that time Starbucks wasn’t selling brewed coffee, rather they were selling coffee beans. When the original founders wouldn’t embrace Schultz’s idea of selling coffee by the cup he left to start his own company. Then in 1987 he bought Starbucks from the original founders for $3.8 Million of other peoples money.

The original founders don’t talk about Schultz much. Rather they quote the movie Bambi…when Thumper’s mother tells Thumper – “If you can’t say something nice about somebody, don’t say anything at all.” The feelings of the original founders don’t seem to distract Schultz much at all. Which is a trait quite often found in people that succeed.

And the apparent disapproval of the original founders is not the only challenge Schultz has had to face. One of the first challenges was the prompting of his father-in-law to give up on his coffee dream and get a real job. Then he had one of his early investors who tried to wrestle the company from him. And now he has the newest challenge…how to deal with the unexpected threats from companies such as Dunkin Donuts and McDonalds…who Schultz admits to visiting to try their coffee. His description…“swill.”

In the year 2000 Schultz turned the day-to-day operations over to other people. But in January of this year he stepped back into place as CEO of the company. He felt that some of the elements that had made Starbucks what it was had been lost and he was there to bring that back. And he is doing it with the same enthusiasm you might have imagined when he returned from his fabled trip to Italy where he came up with the original vision of coffeehouses on every corner that become the social hub of the neighborhood.

Which brings up the question, how do you keep things as exciting and fresh and new as they were when you first started?

· Keep learning and trying new things – Schultz is absolutely ecstatic about a new drink that Starbucks will be offering this summer in California and in all of Starbucks 16,000 stores by next year. Schultz says of their new drink – “I’m energized, and believe it or not, I’m excited by this.” “Were in business for our customers. And they’re going to love this!”
· Refocus as necessary – Just a month after taking back the reigns of the company, Schultz…in great theatrical fashion…closed more than 7,000 stores for three hours so 135,000 baristas could relearn the art and fashion of making decent espresso. The cost to the company in wages and lost income…$10 Million. But Schultz insists that it was worth every penny. He said Starbucks will look forward with laser intensity by looking back to where it all began…the coffee.
· Don’t be afraid to make changes – Since taking over the reigns Schultz has not been afraid to get rid of those things that seemed to have become a bit of a distraction to the original mission. He has discontinued the breakfast sandwich that was available in some locations. He said that although it was profitable it interfered with the original intent of Starbucks. He is also reinventing all of the food offered in Starbucks. He recognizes the shortcomings of their baked goods. Schultz says, “I am embarrassed by the food.” “The food is going to be completely reinvented by fall. With a stake in the ground. Done!”

Whether it is business or if it is your relationship with Christ; don’t be afraid to refocus, to make changes to keep things on track and to keep things fresh and new…always.
Lamentations 3:22-25 – “Because of the LORD's great love we are not consumed, for his compassions never fail. They are new every morning; great is your faithfulness. I say to myself, "The LORD is my portion; therefore I will wait for him." The LORD is good to those whose hope is in him, to the one who seeks him.”
Have a blessed day,

RodZ

© 2008 – Rodney Zimmerman – All rights reserved