Challenge to Change at Starbucks

From 2008 to 2010, Starbucks was faced with a challenge: Reduce spending by 500 million. This required closing 600 stores and canceling the planned opening of 348 others. Those stores represented 8 percent of U.S. company-owned operations and 12,000 partners (employee) positions. It was a bitter medicine traced to company misreads and missteps. CEO Howard Schultz told Starbucks employees, “I am sorry, and I apologize if anyone feels that we have fractured the culture and values of the company.”109 (Links to an external site.)

A challenge to change faced Starbucks. Operationally, changes to jobs and roles shifted rapidly. On one afternoon in 2008, Starbucks closed the doors to every store in the company to retrain 135,000 baristas on how to correctly pour a shot of espresso. These closures cost an estimated $6 million.110 (Links to an external site.)

Other changes followed, including a standard six-step process to brew coffee, setting up a pastry case in 25 minutes rather than 45 (saving $60 million in less than three months), and having employees slow down to focus on quality—making no more than two drinks at the same time and ending the practice of reheating milk.111 (Links to an external site.)

For Starbucks, the challenge of change continues, especially in a global economy. Coffee drinking tends to reflect economic growth, so as the middle class of other countries such as China grows, so will coffee consumption—something Starbucks is betting on.112 (Links to an external site.)

Starbucks has grown to over 290,000 employees in more than 28,000 locations with total equity $1.16 billion in 2018. On June 26, 2018, Howard Schultz retired to become Chairman Emeritus of Starbucks.

Manning, George. The Art of Leadership. Available from: Bookshelf, (7th Edition). McGraw-Hill Higher Education (US), 2021.

Questions

1. What would you do if you were leading Starbucks today?

2. What policies and practices would you change?

3. What policies and practices would you keep?