Howard Schultz tells shareholders that "the company is extremely healthy and robust"

The CEO said the coffee chain's ambitious turnaround effort sliced $580 million from its expenses and the turnaround is now taking hold. "Growth was covering up mistakes," he told investors. "But we cleansed ourselves of that and we began to understand that we not only had to fix the mistakes but also start righting the ship. ... We realized we had to fundamentally transform the company by taking out cost." || Read "Starbucks to pay first dividend, expands buyback"

Comments

[just a shift]

If only the equipment and training in my store could be so robust. I guess repairs and development were, to paraphrase, costs taken out.

Congrats, Howard... you really did manage to transform the company. It ain't the land of the green cool-aid any longer.

[Darth Sidamo]

I like how to him having a store adequately staffed and giving partners personal days is a "mistake"

[pdxy]

have i mentioned how much i love darth sidamo? cause i effing love darth sidamo.

If you're a guy its total bro love, we can watch the game and have a beer.

if you are a lady i wish to marry you.

[just a shift]

I guess the ASM purge a year ago February was a "cleansing" as well. Likewise the dissolution of our network of field techs. Better to invest in outsourcing and outside hires. The stockholders do love that.

[adoubleshotofclarity]

@just a shift, the ASM "purge" was not a cleansing of a mistake. The ASM purge was an unfortunate but necessary side effect of the fact that growth had to come way down.

Having a large bench of ASMs who are ready to step up and take over a store of their own makes sense when there are 1000+ stores opening every year and those positions are opening frequently. It does not make sense to keep such a large bench when a much slower pace of growth results in a much lower number of SM openings.

[gc]

RE: Posted by: adoubleshotofclarity | March 24, 2010 at 03:15 PM

Oh, what's that? Is that rational reasoning being given? Not too much of that around these parts these days.

[Karl Dahlquist ~ karldotcom]

There was a question from an espresso machine salesman/repairman shareholder (espressrecyclers.com) about all the old Verismo 801 machines being "destroyed" after they are taken out of Starbucks and replaced with Mastrenas. Howard seemed to not agree with this statement and said there was a plan with the manufacturer for them.

(probably to keep their resale value high....rather than flood the market with used machines)

Does anyone have any more information on this? I have read that Starbucks had an exclusive U.S. agreement through 2010 for the 801 machines, and wondering if they were obligated to return them to the manufacturer rather than put them on eBay or something.

[molly manager]

Cost Control:
1.) Cut labor
2.) Pay baristas min. wage and asms, shifts and mgrs. crap
3.) Cut facilities and make baristas and mgrs do more. who cares until the stores fall apart. then we'll just open new ones.
4.) Create cheaper products that cost more, pike, via, and frap., these obviously make customers happier.
Profit in the bank for all shareholders and a great sales (sorry) work environment for all baristas.

[s]

I have a question that is barely related to the topic. I've been a shift for 6 months and just got my 6 month review. I was under the impression that the first raise of new shifts was 90cents. I got all 4's on my review. Consistantly exceeds expectations. I got a whopping 35cent raise.
Have they changed the first raise hike for new shifts?

[formermanager]

s, it's a percent, not a dollar value, I think.

[Joe]

All 4's after only 6 months in position? Your manager seems very generous.

Anyway, the 6 month rate is a 10% increase.

[coffee4me]

Craziness!

s, it's a percentage thing. Also, I am curious as to how your review was done with all 4s since for a shift the rating system is now 0-3. I mean congrats and such but I am just very curious about this.

[adoubleshotofclarity]

@gc... Haha, I'm just waiting to get slammed for it. I feel like Eminem in 8 Mile... Might as well call out all the crap that's going to get flung at me before the other guy can do it. I'm a corporate plant. I drink the kool aid. I'm Howard posting under a pseudonym. I actually work for (local indie coffeeshop that everyone idealizes because the grass is always greener) and I just got lost.

...Did I miss anything?

[adoubleshotofclarity]

@s, Before too much advice gets passed around, keep in mind that labor regulations vary by city/county/state and in some places the raise program is going to be different than in others. What you read here is not going to necessarily be from someone who's under the same regs (and therefore scale) as you.

The best thing to do is talk to your manager if you don't understand the merit system. Even as a barista I made it a point to learn this well before my first review, so there would be no surprises. Partner Resources is also available if you don't feel you're getting an honest or fair answer from your SM... I think their info is on the portal iirc.

[gc]

@Posted by: adoubleshotofclarity | March 24, 2010 at 11:17 PM

You're from the future, coming back in time to influence the general direction of the company with your portrayals of the company. Other than that, no, you got them all. :D

[me myself and I]

s, here in Ontario the raise is a percentage. You can score between 1 and 4. If you get the best evaluation possible (haven't seen anyone getting it since the introduction of this kind of review) it will be a 3% raise. An average of 3 equals 2%, 2 equals 1 %. I guess 1 will get zilch, but I don't know for sure.

Maybe you got confused with the raise between being a Barista and becoming a shift? I'm not sure, but I think it's pretty much a 90 cent difference between beginner Barista and beginner Shift.

Either way, we are getting 75 cents an hour more starting next week. Yay! Thank you, rising Ontario minimum wage!

[Herman M.]

So glad to hear all the partners that have gone these past couple years are now all called mistakes. And outsourcing control of the coffee quality by getting rid of all the techs? That isn't a mistake? Great. Next step: close all the roasting plants and contract roasting out to Folgers.

[sunshinebean]

Congrats to Howard,for saving the company!!! A person, or company when faced with crisis really shows its values, and ethics. In Howards own words, "we made some poor choices".. So to all of you partners who have been abused, degraded, overworked, and humiliated, do you feel better?
I do not!

[me myself and I]

The funny thing is the ones that make the poor choices never really seem to have to pay for them. It's only the front line worker and middle management that has to pay, never the top level management that actually makes the decisions.
Welcome to corporate America.

[doppio]

I'm just a customer and I want to say thank you to those employees who have tolerated all the labor cuts and decline in quality and still manage to smile, provide friendly service and make a good beverage. Keep up the good work!

[Shift Supervisor]

In my old district and when I became a shift supervisor you got the initial jump in pay from barista to lead and then you got another set jump in pay at your 6 month review and then after that you get to the % raises. I don't remember the 6 month jump but I do think it was around .90.

[BaristaDude]

Shift Supervisor is right.

When you get promoted, that becomes your new anniversary date. You are raised to the starting rate of a SS (unless your current rate is higher than that and then your SM and DM work with HR to identify a new rate, tho rare).

Then at your 6 month review, assuming you don't rate a 1, receive the 6-month rate (different than that of the rest of your time with Starbucks. It is higher because whether you score ME, AE or CE you are now 'seasoned' and receive that rate). All reviews after that are based on your score. Rate percentages vary by market (and probably country for all I know).

Just a side note, it is not unusual for the rate to be wrong at 6-months. Many SM don't watch it when they do the E-Pan and it defaults to the percentage calculation. SMs have to manually put in the 6-month rate to ensure it is correct.

[wasatech]

RE:Karl Dahlquist
During Mastrena upgrades,v801's were to be destroyed on site, usually the CPU is crushed. That is contractual.

I just checked out espressorecyclers.com. Those guys are in for a heap of trouble. I like how they registered the URL outside the country, but list an Issaquah address on the site? Are they trying to cover up who they are?

Aside from the v801 being a complete money drain for whoever "rents" one from them, Thermoplan quit production over a year ago. So once they are gone from the stores, the parts will dry up. There is only so much canibilization of old mods before you need parts.

[ncsm]

The ASM purge of last year seems all the more questionable in light of the fact that turnover among SMs has been extremely high--at least in some regions. In one district in Nor Cal, 10 of 12 SMs were either let go or quit within the last 12 months. Seems that rather than reaching outside the company for almost all of their replacements, some of those ASMs (many of whom were strong performers) could have been retained and promoted. A company that is either unable or unwilling to promote from within is a company asking for big trouble in the future.

[just a shift]

Well put, ncsm. For the past several years, I've seen departing SM's and DM's only replaced with outside hires. Is promoting from within another "unfortunate but necessary side effect of the fact that growth had to come way down," doubleshot?

[marco]

I love my job, my manager, my coworkers, a good portion of the regulars. I work with people who do far more than they should only because of friendship and loyalty to our manager and staff. Its the only corporate job I have found where people care about the job because they CARE about the people and the consequences of failure on anyone's part. we actually set people up for success... but have a super naughty fun time doing it. we take care of customers VERY well and are totally ridiculously TMI with each other and (legally) TMI with customers. I would quit if I didn't work at my store.

[buck'it]

after just transfering out from under a horrible manager i agree with marco. if i weren't at my current store i would have quit after the holidays. everything is going downhill

on another subject. i hate the fact that because of all the labor cutbacks everyone is working at their full capacity and cannot pick up any hours. my whole store has had the flu this last week and everyone was working with a fever. it was horrible. but no one can rearange or spare anyone because everystore is bare bones coverage.