The first Starbucks was opened in Seattle, Washington, on March 31, 1971, by three partners Jerry Baldwin, Zev Siegl, and Gordon Bowker. They had two things in common: background in academia and their love for Coffee and Tea. They borrowed some money and opened first store in Seattle and named it “Starbucks” after the first mate in Herman Melville’s classic novel Moby Dick.
Their beginning was inspired by Alfred Peet who was a coffee roasting entrepreneur. Peet used to import Arabic coffee beans to United States in 1950s. In 1966, he opened a small store “Peet’s coffee and Tea” in California that specialized in importing first rates coffees and teas. Peet’s success inspired them to create their business model on selling coffee beans and equipment. Later they started offering their own blends and flavors. They replicated the success and opened four stores in Seattle but Siegl decided to pursue other interests in 1980.
The Schultz Era
Howard Schultz, a sales representative from Hammarplast, a Swedish company that was supplying goods to Starbucks, noticed quantity of their orders coming from Starbucks and decided to visit. Schultz was impressed and joined Starbucks as Head of Marketing. Schultz took multiple initiatives which helped Starbucks to grow. However his biggest idea of implementing his learnings from International Milan show was not accepted by Baldwin and Bowker as they wanted to stick with their traditional model.
Post Schultz Era
Schultz left Starbucks in year 1985 and started his own “II Giornale” which tasted quick success and expanded immediately to multiple cities. In Mar 1987, Baldwin and Bowker sold Starbucks to Schultz. All operations were combined under brand name “Starbucks” and company entered in meteoric period of expansion and went public in 1992. Success continued and they opened stores outside United States and Starbucks became largest coffee-house chain in the world. The world’s largest Starbucks, a Starbucks Reserve Roastery, opened in Chicago in 2019.
Starbucks is going strong and there is lot to learn from their journey. It starts from the strong mission Starbucks is on “Inspire and nurture the human spirit — one person, one cup, and one neighborhood at a time”. Starbucks success so far has both strategical and tactical elements. Every action taken is in alignment with their long term strategy. Let’s take a look at how Starbucks was able to achieve immense success.
Core values:
- Centered around customer and experience.
- Always take a note of Customer’s name
- Maintain customer’s history
- Take feedback seriously and innovate
Offering:
- Great customer experience
- More than 30 blends, handcrafted beverages
- Merchandise, mugs, accessories, equipment
Innovation:
- Believer in experiments and continuous innovations
- Frappuccino which keeps up with the trend while serving their original beverage.
Location and Ambience:
- Location convenient for students, casual and business meets
- Comfort, color schemes, furniture
Core competence and vision:
- Play on strengths and build business around their core competence
Employees:
- Employees are partners
- Starbucks takes care of tuition fee of their employee
- Gave at least 5% raise to all 150000 employees in 2016
Society:
- On mission to hire 10000 military veterans and their spouses
- Hire 10000 underprivileged youths
Starbucks is currently going strong with 22,500 stores in 70 countries, revenue of $19.2 billion, operating income of $3.6 billion and $88 billion is the market cap.
Schultz writes in his book — Pour your heart into it
“I’ve always been driven and hungry, Long after others have stopped to rest and recover, I’m still running, chasing after something nobody else could ever see”
I hope you enjoyed reading this article!
