Starbucks Success Secrets (part 1)
The story of the legendary Starbucks began back in 1972. Friends Zev Zigl, Jerry Baldwin and Gordon Bowker decided to open a small business for three – a shop selling coffee beans, as well as various devices for roasting and brewing coffee. Entrepreneurs owe the name of their business to the world famous Moby Dick literary work by Herman Melville.
Why coffee? Yes, it’s just that all three passion loved this freshly brewed, aromatic drink. For about 10 years in a row, things were going very well at the coffee shop. And in the 1980s, business began to undergo some changes.
Coming into the Howard Schultz business
The first business left Zev Zigl, and it happened in 1980. At that time, the business was not just one small store, but a whole network of six outlets throughout Washington.
Starbucks Success Secrets
Howard Schulz, who is today a key player in Starbucks, was a representative of Hammarplast in 1981. One of the activities of Hammarplast was the production of plastic thermoses. And it was these thermoses that Starbucks owners often bought for use in their business. Howard Schulz became interested in their activities and began to provide all kinds of support to the business.
A year later, Schultz led the marketing department of Starbucks. After working quite a bit, he went to Milan, where there was a large exhibition of dishes for catering establishments, with the aim of introducing Starbucks. There he learned about the traditions of making espresso coffee, which sowed even more love for coffee in his soul. Continuing to study the Italian coffee culture, Schulz also visited Verona, from where he brought a recipe for the now mega-popular coffee – latte.
Around the same time, an idea arose in Schultz’s head, which at that time had become something like an epiphany. He wanted to create establishments in which only fans of good coffee would gather and enjoy this drink in a cozy atmosphere. He developed the whole concept of such institutions a couple of years, improving and honing even the smallest details.
The implementation of a new concept
Jerry Boldun, who at that time still headed the Starbucks chain of stores, for some reason did not want to completely plunge into the restaurant business, however, Howard’s idea pleased him. So the first espresso bar was created on the territory of one of the existing Starbucks stores. Businessmen were interested in what came of it.
The Starbucks chain continued to grow, and when the first Seattle coffee shop was opened, it gained wildly and instantly popularity among coffee lovers. Within a couple of months, the daily number of visitors was off the charts, and sales were several times higher than in all other Starbucks stores combined.
1987 was the year that ownership of the coffee chain reached the Seattle group of investors. The deal was worth $ 3.7 million. Howard Schulz, using his talent for persuasion, was able to persuade investors to pay precisely this amount, promising that in the next five years, the network could expand to 125 outlets. Shops, which until then were only selling coffee beans, were transformed into cafes. The Starbucks logo has also been refined and converted into a more “decent” version (previously the mermaid with naked breasts was on the logo).
Further, the development of Starbucks began more than rapidly. Separate cafes appeared in cities such as Chicago, Portland, Vancouver and others. In the early 1990s, the company experienced the following changes: Starbucks airport stores were opened; California was conquered; as well as the company turned into a public one and began to openly place its shares.
In 1997, the number of Starbucks coffee houses was already ten times higher than in the early 1990s. Not only the inhabitants of America, but also the inhabitants of Japan and Singapore could indulge themselves with a trip to this legendary place. By the way, the first Starbucks establishment outside of America was opened in Tokyo (Japan) in 1996.
Starbucks Success Secrets
Over time, it became clear to business owners that it was time to expand their activities and go beyond the scope of coffee sales in catering establishments. Then an agreement was concluded with United Airlines, the subject of which was the sale of Starbucks coffee on airplanes. Collaboration has begun with the elite tea manufacturer Tazo Tea Company.
Starbucks also began to conquer the Internet entirely, and the first step towards this was the online product ordering service. In cooperation with Dreyer, the production of high-quality coffee ice cream began, and ground coffee and coffee beans from Starbucks could now also be purchased at Wall-Mart stores.
As you know, the most effective advertisement is word of mouth. Starbucks owes its stunning success primarily to this ad. In 2004, a record number of points of sale was opened for the coffee business, namely 1344. Starbucks coffee houses appeared in Bulgaria, Chile, Hungary, Romania, Bahrain, Canada. Now the number of coffee houses totals about 17 thousand.
Today, the famous logo with the image of a mermaid in the crown can be found in more than 9 thousand cities, and more than 20 million people around the world become customers of these institutions every day. At Starbucks you can enjoy not only the coffee itself, but also other drinks, as well as snacks and sweets.
The main thing is communication
Despite the fact that coffee is the main product at Starbucks, the main bet is not at all on it, according to Howard Schulz (Starbucks CEO). Visitors appreciate this institution, first of all, for a great opportunity to chat with other people in comfortable conditions, whether it be a friendly meeting or business negotiations.
When the company conducted market research to find out why people visit the Starbucks network. It turned out that the presence of delicious coffee is not in the first place, although it is one of the five most popular answers. Visitors put the social factor in the first place – the possibility of a pleasant interaction. The Starbucks team has devoted and continues to devote a great deal of time to creating an atmosphere conducive to this. So that visitors could feel comfortable, a maximum of conditions was created for them – comfortable furniture, pleasant unobtrusive interior, free Internet access, special layout of the premises.
Since Starbucks coffee houses won the love of visitors not only as a place to relax, but also as a place to work. Business meetings are often held here, and freelancers come there with laptops and get to work. Howard Schulz came up with such a definition for his institutions as “third place”, that is, something between home and work.
“Our goal is not just to feed our customers. Our goal is to make our customers feel at home inside Starbucks, ”says Schulz proudly.
The drink also played a role in the development of Starbucks. It all started with a small store in which three friends (the founders of Starbucks) sold their own roasted coffee beans. Howard Schulz joined the company later, however, he decided to maintain the established traditions regarding high-quality coffee and his own roasting of beans. In this regard, Howard Schultz had some difficulties in managing the company, which he was able to solve while appealing to visitors.
Thus, our own method of producing coffee powder was developed, which was necessary to avoid the problem of exhaling coffee stored in a warehouse for a long time. Also, at the request of customers, decaffeinated coffee and skim milk began to be sold in Starbucks, although the presence of these products was somewhat contrary to the institution’s original concept.
Starbucks is not ignored by social responsibility, which is now so fashionable to talk about in large companies. The activity is based on the principles of fair production and fair trade, only adult and legal labor is used and all kinds of measures are supported in favor of protecting the environment and ecology.