Schultz: "We can no longer sit back and ignore the pressure our customers are under"

Some Howard Schultz quotes from today's shareholders' meeting
* "Starbucks Coffee Co. will not only survive but we will succeed during this environment. I promise you that."
* "We're being incredibly smart. We're doing everything we can to be sensitive to the needs of our customers. We can no longer sit back and ignore the pressure that our customers are under."
* Regarding Via instant coffee: "We have the early signs that we are onto something here that's quite significant and extraordinary."|| Read "Starbucks CEO promises company will thrive" ||| Stories from the Seattle Times and Post-Intelligencer ||| Read Starbucks' news release on the meeting

Comments

[SirensBlazing]

I really enjoyed the Q&A today when the gentleman asked about corporate jets and the "unnamed person" who flew down to Hawaii for the holidays. Howard, of course, took the opportunity to talk about what an angel he's been in terms of paying the company back for flights and for not taking salary during this time. He even came out and said that he was the one that was in Hawaii. I wish the gentleman would have questioned why the Starbucks Company spokesman refused to name Howard when he/she was asked who took the trip when the story first came out months ago!

Other than that, I heard a lot of BS about "not doing what is expedient for short-term gain" and "not sacrificing our core values" and I could not help but roll my eyes. I really think this company (or at least its leadership) believes that if it says something enough times, it is the truth. Perception equals reality in Starbucks-land.

[James the Barista]

Melody asked a question at the meeting. Yes, THAT Melody. Starbucks Gossip Melody. Pretty Surreal.

[Coffee Soldier]

What did she ask?

[Ex-Nerfebarista]

When will pike place roast be discontinued?

[ihatepikes]

What did they say about pick place?

[bryan]

The hubris displayed in the selected quotes is amazing.

[SBUX Alum Bill]

The Seattle Times pretty much described the meeting as a non-event. I pretty much agree:

Seattle Times: Starbucks Annual Meeting

[Me]

"We're being incredibly smart. We're doing everything we can to be sensitive to the needs of our customers..."

Seriously? So why do I have to jump through hoops several times a day to explain to customers how incredible smart that idea of discontinuing decaf after noon is??? They always look at me like: *wtf*

"We have the early signs that we are onto something here that's quite significant and extraordinary."

So the early signs are people chasing after free samples and are surprised it doesn't taste like cat pee. But does Starbucks actually SELL any of these???
Does anyone remember oatmeal or vivannos? We've had early signs of a HUGE success story there as well. At least as long as the samples were rolling out by the dozens and as long as everyone's curiousness was satisfied. Does anyone still order these things? At least not in my store (and wouldn't it be a perfect time for oatmeal right now?)

And finally, we all know what a promise from Mr. Schultz is really worth....

[Crema_the_crop]

Me--

"Seriously? So why do I have to jump through hoops several times a day to explain to customers how incredible smart that idea of discontinuing decaf after noon is??? They always look at me like: *wtf*"

If you are doing that, then it may be an indicator that your store should be continuing to brew decaf longer than you are currently.

In my store oatmeal is a huge success. We are on the campus of an expensive private university and many students use their parentally-reloaded SBux cards for a status-licious breakfast every morning, an iced passion tea lemonade every afternoon, and a hot chocolate or tea every evening. Many of our regulars are two- or three-times-a-day regulars and these additions have helped to increase our average ticket almost 10-15% since last year.

[Crema_the_crop]

Additionally, ever since our upper-midwest weather has taken a turn for the warmer, vivannos have made a huge comeback. Over the winter we didn't keep any prepped bananas on hand and simply sliced them before blending so the quality didn't suffer. Yesterday we went through almost half a case of bananas.

[spence]

. . . just so you know, we sell more oatmeal in a day than anything else in the pastry case or RTD.
(I live in the south where it's warm outside.)

[javamamma]

The article stated,"Starbucks introduced the pairings, which combine a latte or drip coffee with a food item;..." Customers at our store (Texas) have been asking if the parings include coffee. Our baristas did not get the memo that parings include drip coffee and we have have had to just say "no". Did this change? Are we missing something down here? Just trying to keep up.

[nycsm]

@javamamma

If you are a non-warming store you won't have the coffee/breakfast sandwich pairing.

[Me]

I'm happy for everyone who sells this stuff. But really, at my store (and the other stores in my district) we don't sell more than maybe 2 oatmeals a day. And right now it is about 2-4 vivannos (one of them usually to myself). But even though we are in the cold north we still sell somewhere between 30 and 40 frapps a day at my store.

And the best part is, Canada is going to introduce the pairings very soon as well. Unfortunately we will only pretend they are real deals because we will feature them as pairings but ring them separately as regular priced single items. It's just an attempt to upsell, without any benefit for the customer.

[Kathy]

My store does not have warming but they have pairings. They offer 1 whole pairing, a latte & muffin

[Blowing Smoke]

Schultz said "the gold card has been far more successful than the company anticipated. More than 750,000 cards have sold, he said."

If they are such a success, why are sales down 10%. I'd make the argument that it is hurting sales. With Howard, it is all good.

[letusmanagehowie!]

I wish that instead of hitting product targets, we would move to a more top line sales goal, and let managers do their job. If Vivanno's don't sell, but oatmeal does- who cares as long as we're hitting top line sales? Shouldn't we be allowed to actually manage our business? Isn't that why we're managers?

I understand that we can track product satisfaction on the back end as a part of sales, but please, if you're asking me to "drive" vivanno sales in an area where every customer who comes in wants a latte, then we're just going to piss off customers.

[Me]

"Growing its consumer products, licensed stores and foodservice channels"

That's exactly what we need. Confuse our customers with even more licensed stores and dilute our brand with more useless things on the grocery store shelf.

At least make changes to the licensed store concept. Give them another color theme or whatever it takes to make it easier for customers to distinguish the "real" stores from the licensed ones, where they might not get everything the way they might expect it from a Starbucks (like promos, service, quality (e.g. coffee holding times) etc)

[beantheredonethat]

The AGM. With Howard, Martin, Cliff, Michelle and the rest of the senior leadership present, makes me really think what has changed (other than a few people at that level shown their walking papers over the last year)??

So if nothing really changed, then the same people that drove Starbucks into the ground are still driving the bus. Will real change happen if the same people are calling the shots? I do not think so.

Wonderful. Just wonderful.

[TNT]

Lies, BS, and flowery talk. What else would anyone expect. Of couse Howard said everything is going to be wonderful. Isn't it wonderful? Can you all not see how wonderful it is? If Howard said it's wonderful, then of course it's wonderful.

Please stop! I'm laughing so hard I think I wet myself.

[SBUX Alum Bill]

The PI has just posted a more extensive summary of today's meeting:

Starbucks CEO: "We want to be trusted"

[concerned_barista]

so seven partners who worked at my store have been laid off over the course of the past month. it's a little bit more than coincidence that partners from my manager's old store (recently closed) have started to trickle in... some have been offered positions others just spend a non-kosher amount of time around the store and with the manager. Is it okay for this new manager to do this?

[Tito Garrido]

If you are interested in the international dimension of Starbucks and coffee culture beyond the US and Great Britan, you might want to check out this article. Customers outside the US are sensitive about paying more for beans and coffee drinks to help subsidize the modest discount program now being offered in the USA. http://tinyurl.com/cvfhgv

[Melody]

Just for anyone who is curious, I asked a question during the Q&A which essentially was attempting to gauge whether MSI has been a "success" and whether Starbucks continues to maintain an enduring commitment to it. I also asked how many MSI ideas have been used. 25 ideas have turned into real action.

In all honesty, I was totally nervous and I wanted to asked a question that I was personally interested in (I do have some fun at MSI), and I wanted intentionally for it to be a soft-ball question given the circumstance of being on the spot and watched by a crowd. My nervousness was only made worse by the comment by Howard Schultz of "everyone knows Melody" - it's hard to explain but it was a bit mocking tone of voice. But oh well. I'm sure I read too much into that!!!

As to the meeting itself, it was almost a bit of a snore.

When the meeting was all over, as we left we received a pound of Brazil Ipanema Bourbon. Oh the aroma is intoxicatingly wonderful. This is the Starbucks I still love. This afternoon I drove out to a Clover store and asked for them to make me a Clover cup of Brazil Ipanema Bourbon, and so I had my first cup through the Clover. Very nice. The body is just a tad thinner than what I like, but I like the nutty tones in it. I will definitely have this again while it's available ...

[LSM]

@Me-Licensed stores are not a "concept" they are stores! When it comes to product quality, holding times etc, they are held to exactly the same standard as company operated! Yes, there are some stores that are not perfect performers, but there are some company operated ones that miss things too! For differences customers see in things like registered card benefits, if more time was given for the licensees to adapt their infrastructure, I bet you would see a lot more alignment between these two types of stores. Besides, in any profitable, successful franchise relationship, it's up to the brand to ensure their standards are executed as intended! If all partners (& associates) treated each other with respect & dignity, and stopped focusing on perceived differences, the brand would be much better off!

[Yup, it's Negative Nancy]

Wish I could be as upbeat as Melody, but I think I'd rather keep my benefits than the weekly pound of coffee.
Wait and watch: old-timers (getting benefits and higher pay) will be moved out and replaced by lower-paid, lesser-trained part-timers. I'd be really happy if I ended up being wrong about this prediction, btw.

[(former) FLA SM]

@ letusmanagehowie! You are absolutely 100% correct. Unfortunately, Starbucks will never allow that to happen because they don't want people who can actually think for themselves. They might figure out the emperor has no clothes.

[Melody]

@negativenancy: It's a tradition that shareholders leave the meeting some coffee and like a goody bag or something. So my comments about the new Brazil Ipanema coffee were not related in anyway to your markout. Sorry for the confusion! I really just wanted to say it's a good coffee and smells fabulous!!

I have my complaints with Starbucks, but I don't need to reiterate those over and over again in every post.

[vanilla bean in my ear]

game face, thanks for telling the truth, congrats on your endeavor to ownership, please remember what happenings you witnessed and be true to all. game face is the way it seems to be. the ones who can smile from the time they clock in till the time they leave are the ones who get to stay. happy happy joy joy, the others........?

melody you said the same thing, about this years ipanema having a more washed taste that camspi said at work the other day. i guess you two are coffee mates, lol

lsm- from a customer stand point the reason i avoid your stores is the fact that i put money on a personal card(registered) and i go to say vegas where every starbucks on the strip in casinos is a license store and i can't use the money i have put on my card. excuse me, is this a starbuck or not? who was asleep during the meeting for this business deal. i have nothing against these stores except that, but for that reason i ask every time i'm away from home is this a license store and when the answer is yes then i say thank you and leave. if this happened to me solely as a customer i would not come back to any. just who i am.

[TNT]

Were we ignoring the presure our customers are under before this meeting? How about the shareholders?

Oh that's right, top management was just worrying about all the presure they were under due to all the stupid desisions they've made in the past five years.

Instead of a pound of coffee to each investor they should have handed out anti-depresants.

[BOSTON STARBUCKS REBEL]

I play hardball with my questions so I wouldn't be afraid to ask some provactive questions. Like

1. Many partners have been laid off at the store retail level. These lay-offs were not based on performance but on availability. Is this fair?

2. New stores will be LEEDS certified but what about older stores? Will older stores be retrofitted and if so how do you implement those plans?

3. The global recession has slowed business for Starbucks? When does Starbucks believe that the recession will end in the US? Will Starbucks sales be a leading or lagging indicator of a meaningful economic recovery?

End of line.

Out.

BOSTON STARBUCKS REBEL
PRIMUS INTER PARES
STARBUCKS REBEL ALLIANCE

[Me]

LSM, I've been in licensed stores that were wonderful, but I've also been in some really bad ones. (same goes with "real" stores, by the way).
Thing is, as someone mentioned, you can't use your card there, you can't get the merchandise you like, you can't get the promotional deals, they don't stock pastries or core RTD&E items etc. And I've been to three licensed stores lately that told me they hold their coffee for 90 min instead of 30. These things do affect customer experiences. And the customers blame Starbucks, not the licensee, since they don't know and can't see the difference.

And, most important for me as a partner, I can't get my discount there! :-(

[SoOverIt]

I have a better question?? Why, with the negative economy, are budgets written to INCREASE SALES??
Answer: So we don't have to pay bonuses to the managers that have to interrupt their lives at the drop of a hat for a useless DM, who spends most of her time under the RVP's desk!!!

[BOSTON STARBUCKS REBEL]

Some store managers even have to have their schedules approved by the DM. That's real ownership there.

[NewFlowerE]

SoOverit - I don't know what your store is budgeted for, but I do know of stores that were budgeted to lose money, and those stores beat budget by a wide margin. I think they might bonus.

And the "useless DM" would be under the RD's desk in your senario. The RD sits under the RVP.

[inopethflames]

anybody know when a new latte(s) will be coming out? i had no interest in the tea lattes.

[Just Sayin']

I really think that all of the negativity by people is what really hurts the company. Just look at the comments on this blog. Most of us are partners, let's admit it. If it's US who are constantly bashing our CEO and really losing faith in the company, then we are becoming the reason sales are so bad. If we don't have faith that the country will pull out of this economic hardship as will Starbucks, then we are just helping to bring it down.

We should all just be thanking our CEO that every other Friday our bank accounts are fed and also that Iced Venti 3 Equal Mocha comes back every day to fund it. We are only wasting time sitting on Starbucks Gossip complaining, no?

[SBUX Alum Bill]

Maybe some of you are working in the wrong place:

WalMart awards $2 Billion in bonuses to employees

(Yeah, but they don't get to be called "partners")

[Ettal]

Here is an enlightening stock chart for all you "bitter beans" out there.

It represents the last 10 days on the stock exchange comparing SBUX to McD's, the DJIA, and all other stocks that fall in the "Restaurant & Bar" category.

I'm not saying SBUX stock is out of the woods... I'm just saying that recently it is outperforming well.

It is always better to light a candle than scream at the darkness my friends.

[BOSTON STARBUCKS REBEL]

Starbucks will not have new lattes but new beverages in the frappuccino(r) blended beverage category.

[TNT]

@ Just Sayin' - Starbucks created the negativity. It started five years ago. They talk alot about accountability, so let them fix the problems. We're just holding them accountable.

@ Ettal - It might still be a bit early to buy SBUX. Let it test it's bottom. Don't let the candle burn you.

[qq]

Optimal scheduling is BS. Our beloved company bumped me from SS to barista, which came along with a $2.11/hr pay decrease, simply because my availability is limited. Apparently the 25 hr/week I work is not enough.

[Shift Supervisor]

At the start of this the quote was mentioned:

"We're doing everything we can to save our company regardless of the needs of our customers and employees. We can no longer sit back and ignore the frustration that our customers and employees are under."

So what is going to be done about the frustrated "employees" (what we are not partners anymore)? granted trying to catch up on here since I jsut got home from "work" I may have missed the one or two little things that they are going to do for us. Can someone please let me know what will be done for the frustrated employees? As for the customers once the employees (using his term) then the customers problems should be under control for the most part. Why can't we just get back to the fun Starbucks we use to have where we all loved working and students could have a job and still be able to go to school and get an education. Plus I had a phone call yesterday with my HR person and she out right told me that we can not joke around at work anymore that it is just work and nothing else. I felt after our conversation like I had a ball and chain and all of a sudden became a member of the chain gang.

[BOSTON STARBUCKS REBEL]

Did Michelle "Lady MacBeth" Gass have anything to say at this meeting?

[Shift Supervisor]

Optimal scheduling was suppose to go into affect this month from what I was told. But I have not seen it yet. We still have partners on the schedule that are get 8hrs and 12 hrs. I am glad they are still there but they need to make up their minds about the schedules and stop messing with peoples minds.

[NeedResumeHelp?]

Negative Nancy - Starbucks is giving the hours to committed full-time partners going forward, not taking away jobs from them and giving them to new lower paid partners like you suggested - so buck up, buccaroo!
Boston Rebel - You talk about holding the company accountable, yet true accountability on your part for yourself would mean getting up and getting a job with the perfect company you dream of. Why do you stay?
If it is because you need a job to support yourself, then what seems to be your lacking, why would no one want to hire you? you sound near perfect. Please bring these posts on this site and attach them to your resume. I think it would add alot of color.
There are alot of partners very proud of the company that you all so cheerfully rip up daily.

[...ugh....]

just realized that every manager with over 5 years with the company in my district is on final written warning, and I think I'm next. Anyone else feel like they are trying to either a) make SMs so unhappy they quit or b) get everyone on final so when they are ready to replace you, you are gone?

also, for managers that have been terminated - has anyone been denied unemployment benefits?

Thanks.

[inopethflames]

anybody know what the new frappuccino flavors will be then? thanks.

[CamSpi]

Originally I just caught the Q&A session of the live webcast. I was a little late signing it... just watched the webcast on the investor section and it was hopeful. I can't help but feel inspired each time he talks. In a really broad sense we are a company based on the value of people, community, human interaction. As a partner in the front line of battle, we've got to remember that. People come first no matter what... that's how I've got to look at it. (I know that there are a few things which are conceivably contradictory to that value, like optimal scheduling, eliminating partners' labor from scheduling thus lack of benefits... but in many other scenarios this company DOES a lot of good.)

On another note, who knows what coffees are coming out after colombia and brazil? any black apron coffees coming? I'm ready for some new coffees! brazil and colombia...its a nice high school reunion, but i want to make new friends.

[Jocko]

..ugh..., The Bux originally tried to dispute my unemployment claim but after three months of waiting, NY decided in my favor and granted me my unemployment. I never even found out what they were claiming in their case against me.

Oh well, I got my money and I have moved on.