Each week Starbucks serves 60 million customers in nearly 18,000 stores in 60 countries. For a company that started as a corner coffee shop in Seattle 41 years ago, those are steamy numbers.
This global growth has been built by carefully tailoring the Starbucks brand to the specific needs of local markets—each with its own traditions, habits, and customs. This is not an easy balancing act, and it all starts with an emphasis on products, “partners” (employees), and customers.
In Beijing and Shanghai, for example, Starbucks recently held an annual meeting for the parents of its employees as a way to demonstrate respect for their families. In the U.K. and France, the company has modified the recipes for its espresso-based drinks to appeal to local tastes—something it had never done before.
CEO Howard Schultz, who has been with Starbucks for most of its history, is painfully aware of what can go wrong when customer focus is lost. Schultz relinquished the chief executive’s role in 2000 but returned in 2008 after changes in stores diluted the customer experience and exacted a heavy toll on the company’s bottom line.
Schultz began rebuilding the brand by reviving the in-store experience. Starbucks spent $30 million to bring 10,000 store managers to New Orleans for a meeting that helped improve employee engagement. He also closed all U.S. stores for three hours one day to retrain the staff in making coffee.
To build on the success of the New Orleans event, Starbucks will hold a similar conference in 2012 in Houston, once again bringing together store managers to engage in leadership activities and community service.
Starbucks recently moved from a functional to a regional structure—instituting regional presidents for the Americas; Asia; and Europe, the Middle East, and Africa—to ensure that local markets receive adequate management attention.
Starbucks has gotten its groove back. Despite the difficulties in Europe, Starbucks has indicated that during the fiscal year 2013 (which begins this month) the company expects to grow by 10 to 13 percent and open 1,200 new stores.
Schultz recently sat down for a discussion with Grant Freeland, a BCG senior partner and managing director. Edited excerpts from that conversation follow.