Starbucks’ Howard Schultz: Wake up, you’re closing the wrong stores!
Posted by: in Companies Competitive StrategyFiled under: Consumer experience, Competitive strategy, Starbucks (SBUX)
Starbucks‘ (NASDAQ: SBUX) Howard Schultz came back to the CEO role in late 2007 to hopefully rescue the once great concept he has so passionately developed since the 1980s. Fair enough. Could this be the second coming of Steve Jobs of Apple (NASDAQ: AAPL) or would it resemble the mediocre return of Michael Dell of Dell (NASDAQ: DELL)? The jury is out and time will tell.
For now, I’ve one major bone to pick. Howard, let’s take some time here to review the store closures. I’m sure a mid-level vice president made the geographical decisions. But I hope you really scoured the list carefully.
Let’s take an example: Minnetonka, Minnesota. Howard, I’m sure it might not mean much to you. After all, you were raised in New York and currently live in Seattle, so Minnesota might be flyover country. Minnetonka is a western suburb of Minneapolis sporting a growing population of about 52,000. Minnetonka is a fairly upscale suburb with near full employment. Just for your information, Minnetonka is also the world headquarters for the biggest private company in the world; probably one of your suppliers. The company is called Cargill — just in case your VP missed it.
It’s on the Starbucks hit list. You’re closing the Minnetonka store. Are you nuts?!! I’ve written in the past that this store should serve as one of your models on how to do it right. Sure, economics eventually have to make sense. This store is about three years old and the growth of traffic has been steady. Used to be one person in line at 10:30 am, now it’s common to see a continuous stream of 7-8 people in that off -hour line. Early mornings are very busy.
Manager Mario Macaruso should serve as a training manager. He’s too much of a gentleman to complain about being on your hit list. Mario is a big believer in Starbucks’ future, but the pain in his eyes is evident. Many of his partners at this store have been there for one or two years, offering the customer a consistency of service, not to mention smiles and morning cheer. You know, the things you espouse about Starbucks!
I’ve visited over 200 Starbucks stores in the past five to six years. This one by far ranks as the ideal customer experience. Funny things happen when time intersects with great service — it’s called profits.
Howard, give this store the time to become profitable if it isn’t already. The Minnetonka demographics fit the bill and store partners are fabulous. Hop on the company jet and fly to Minneapolis — it’s about a three-hour flight — and visit the store. Speak with the partners, watch them work the crowd, take notes.
In fact, make spot checks in other stores on the list. Are they really the ideal candidate? Howard, assuming you aren’t intimately involved in these decisions, it’s time for you to get personally involved.
Sure, I want to save my favorite Starbucks. But I also think CEOs owe it to their shareholders to pay close attention to details in challenging times. To turn Starbucks’ around, you need to make sure the Starbucks you decide to close aren’t actually the ones with the most potential.
Georges Yared is the editor of YaredsGameChangers.com and author of “How to Spot the Next Google.”
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