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Starbucks Hits The Reset Button

As we reported in our Jan. 15 e-newsletter, no one made Schultz, a billionaire, give up his comfortable semiretirement and retake the operating reigns at Starbucks earlier this year. He just didn’t like the way it was going. He felt the company had strayed too far from its roots, and that doing so was hurting the company on many levels, from the stores to its stock price.

It didn’t take Schultz long to get up to speed. Here’s how he described the opening salvo in an e-mail to his employees, labeled “Transformation Agenda Communication #7.”

“Since I returned as c.e.o. six weeks ago, we have experienced a lot of change in a very short period…with our renewed focus on the customer experience and the return to our core—all things coffee—as evidenced by our decision to discontinue warmed breakfast sandwiches in U.S. stores by the end of fiscal ’08; unprecedented Art of Espresso three-hour training on February 26; free wi-fi for partners (i.e., employees) and customers beginning in the spring; and more to come. Together, we have created a blueprint to transform the company.”

Schultz drew up most of the blueprint, including the all-hands-on-deck training session. Nominally, his idea was that “We will revisit our standards of quality that are the foundation for the trust that our customers have in our coffee and in all of us.” The reality was, perhaps, less grand. The company didn’t have, for example, 7,100 trainers it could dispatch to its stores to fire up the troops and show them how things should be done. Instead, store managers and black-apron-wearing baristas with “Coffee Master” designation mostly handled the sessions.

Much of the session involved hands-on training on how baristas should best use the company’s automated espresso machines. “It’s not as simple as pushing a button,” said Ann-Marie Kurtz, Starbucks’ manager of global coffee and tea education. The rest was devoted to reiterating other store practices and procedures, plus an inspirational video from Schultz. “This is not about training,” he told employees. “This is about the love and compassion and commitment that we all need to have for the customer.”

Restaurant chains have training sessions like this one all the time. Few of them train everyone exactly at once, however, and none of them have ever drummed up the kind of media coverage Starbucks received for this one. The Art of Espresso training session was all over both network and cable news, got big stories in newspapers great and small and was analyzed and reanalyzed by the financial press—print, broadcast and internet.

The result was the kind of publicity Starbucks could never buy. A very large part of its current and potential customer base now knows that there’s a new deal at Starbucks, and that employees are all trained to deliver it right now. If there’s ever been a quicker, more efficient, more cost-effective way of delivering a marketing message to a foodservice customer base, we don’t know what it is.

But will all this be enough to get things back to normal at Starbucks? While Schultz thinks the problem is that the chain has strayed from its true mission, many other critics decry the corporate mentality that had gradually crept into the stores as the company grew. Starbucks became the unfeeling corporate monolith of the industry, the coffeehouse people loved to hate. Schultz isn’t saying so in as many words, but that’s a big part of what his recent initiatives are trying to combat.

What the fix? Maybe the chain could start by regaining its sense of humor. Its lack of it has become near legendary on the internet, thanks to the ongoing adventures of Frankie DaVido. The self-styled crooner, loosely patterning himself after his fellow New Jersey native, Frank Sinatra, has been on a lengthy campaign to get Starbucks to add his CD, which features the song “Java Jitter,” to the music offerings the company sells in its stores.

Repeatedly rejected, he resolved to visit as many Starbucks units as he could, singing the “Java Jitter” song at each. The tuxedo-clad singer shows up, breaks into song, and goes with the flow from there, with the whole sequence being videotaped. It’s a goofy act that would be embraced by any independent coffeehouse we can think of.

DaVido is not embraced by Starbucks. Instead, he gets thrown out—203 times in a row at last counting. Humorless Starbucks managers call the police, dial 911 and, in one hard-to-fathom instance, alert Homeland Security. The highlights are compiled in a seven-minute YouTube video called “The Starbucks Rejection Tour.” It will give you a sense of just how seriously some Starbucks baristas and managers can take themselves. No wonder Schultz thinks its time to change the mood at the unit level.

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