Good Cup of Coffee

Starbucks Case Study

Good Coffee, Good Decisions

Starbuck has been always present when we search for good case studies, their unique people concept and the way they have managed to transform their business into lifestyle, their way of managing market dynamics has been always worth learning from.

I have been studying how Starbucks have built their Corporate Social Responsibility (CSR) program, and with what I have seen as movements to face outbreak of COVID-19 was for me worth stopping and dive in to learn more.

It seems that good coffee really help us make good decisions

1971

Starbucks was first founded in 1971 by Jerry Baldwin, Gordon Bowker and Zev Siegel. They opened their first store for selling coffee beans at the historic Pike Place Market in Seattle. Actually, the company did not start as a café, it all started by selling a high-quality coffee beans and coffee equipment.

Howard Schultz

The company remained as coffee beans seller for several years till Howard Schultz joined the firm as Retail Operation and Marketing Director, in 1982. He made a huge difference in the company through Marketing and People Development, Schultz created employees’ training sessions focusing on the in-store staff to develop their customer-friendly skills with the clients. This was the ignition of the iconic Starbucks’ Barista and makes them all special till now.

Howard Schultz; An American Businessman born on July 19, 1953. He began working at the coffeehouse Starbucks in 1982. He later left and opened Il Giornale, a specialty coffeeshop, that merged with Starbucks during the late-1980s.He served as the chairman and chief executive officer (CEO) of the Starbucks Coffee Company from 1986 to 2000; In 1987, Schultz bought the company from its owners and launched the first Starbucks café, with a mission to bring comfort, peace and welcoming feeling during the customer’s visit (to inspire and nurture the human spirit – one person, one cup, and one neighborhood at a time.).

Under Schultz, the company established a large network of stores which has influenced coffee culture in Seattle, the U.S., and internationally. Following large-scale distribution deals Starbucks became the largest coffee-house chain in the world.

Schultz took the company public in 1992 and used a $271 million valuation to double their store count in a series of highly publicized coffee wars; He stepped in again as CEO with the economic crisis from 2008 to 2017. Schultz also owned the Seattle Supersonics basketball team from 2001 to 2006.

Howard Schultz

Schultz was named the 680th-richest person in the U.S. by Forbes with a net worth of $4.0 billion (April 2020).[4] Schultz started the Schultz Family Foundation to help military veterans and fight youth unemployment.

Starbucks is the largest coffeehouse company in the world, with 30,626 retail locations as of the third quarter of 2019, followed distantly by coffee shop chains such as Dunkin Donuts with about 10,000 restaurants, Tim Hortons with 4,300 outlets, and Costa Coffee with nearly 1,700 stores worldwide. Starbucks’ international footprint has expanded outside the US market in 1996, with stores located in three main markets: the Americas, which includes Canada, Latin America, and the US; China and the Asia Pacific (CAP); and the Middle East and Africa (EMEA). The domestic market still represents more than half of all Starbucks stores; California, with 1,863 locations, has more stores than any other state.

Starbucks operates two types of stores: company-operated and licensed. Currently, the store count is almost equally distributed between these two types – 51 percent of stores are company-operated and the other 49 percent are licensed – even under continuous expansion. During the first quarter of 2018, Starbucks launched 700 new stores.

The company’s growth is bolstered by a low turnover of its stores. Only 443 Starbucks stores have closed throughout the company’s history: 240 stores in 2009, the year of the global financial crisis; 42, in 2010; and 161 in 2011. As of 2018, Starbucks’ profit was $4.5 billion and it had a market value of $70.9 billion. Based on the company’s positive, sustained operating results, it is ranked among Forbes’ Top-500 world’s biggest public companies. 

Starbucks is the largest coffeehouse company in the world

Starbucks Foundation & COVID-19

The Starbucks Foundation was created as part of our commitment to strengthen communities. Started in 1997 by funding literacy programs in the United States and Canada. Today they are supporting communities around the globe.

Starbuck incorporated “Triple Bottom Line”. Explained by John Elkington in his 1999 book, “Cannibals with Forks: The Triple Bottom Line of 21st Century Business.” It is a bottom line that continues to measure profits, but also measures the organization’s impact on people and on the planet. The triple bottom line is a way of expressing a company’s impact and sustainability on both a local and a global scale.

The concept behind the triple bottom line is that companies are responsible first and foremost to all their  stakeholders, and these include  everyone that is involved  with the company whether directly or indirectly, as well as the planet we’re all living on. This approach sees shareholders as part of the stakeholder group, but only as part of it. 

I can see that Starbucks is not only incorporating Starbucks Foundation as part of their Corporate Social Responsibility (CSR) but it is becoming what they believe and practice and their Triple Bottom Line is becoming second nature in their management team. it was obvious with their COVID-19 outbreak    

Here are some of the actions they have taken in response to the crisis

On the 4th of March, the company announced that their stores in USA and Canada are all being cleaned and sanitized all day long to keep the health of their partners (employees) and customers safe. Offering 10 cents discount for every customer bringing their personal cup with them. A smart way to decrease the usage of their paper/plastic cups and prevent the spread of the virus when it is thrown away.

The Management also made up a scenario-based procedural information to their store employees educating them on how to report and support anyone that may be suffering from the virus. Postponed all face to face / offline meetings in their offices.

On the 6th of March 2020, Rossann Williams, Executive Vice President, & President U.S. company-operated business and Canada published letter on Starbucks website announcing that one of their employees was tested covid-19 positive.

She then explained that the company is taking a very good care of the employee and their family, and that the store he/she was working in is now closed to be sanitized and cleaned, before it is opened again for their customers.

On the 9th of March 2020, Starbucks contributed in a fundraising with Seattle business and community leaders to support and provide resources through the crisis of covid-19. The company donated $250,000.

On the 20th of March, the company release a decision of closing its cafes in USA and Canada, leaving the drive thru only available, only for two weeks.

This decision was not harmful for their employees as they mentioned that the ones staying at home will also be paid. Moreover, they offered their employees mental health and patient benefits for their employees as well as childcare support for their children and more.

On 25th of March 2020, Starbucks announced that is offering free coffee for the doctors/nurses that fights covid-19 in hospitals “the front-line responders”. Also, donated $500,000 for the front-line responders. The same donation was given to Direct Relief, to support the delivery of 50,000 care packages, medical and protective equipment. (Staff, 2020)

1st of April, the foundation announced donating $3M to support global covid-19 efforts. The donations were divided on UN Foundation, Give2Asia and local grants to support efforts in Canada and USA, in places like Seattle and New York.

On the 8th of April 2020, the company took a very inspiring step in the fighting process of covid-19. They wanted to show the whole world how they care the most about their partners (employees). Therefore, they paid $10M to establish the new “Starbucks Global Partner Emergency Relief Program” to support any of their employees that having crisis during the covid-19 period.

They raised awareness for the USA citizens about Feeding America to donate for it, after they donated by $1M for it.

Donated more than 700,000 meals, 62,000 gallons of milk, 1 million cans of iced tea throughout USA and Canada

They donated $200,000 to food banks in Canada. As well as $50,000 to support food distribution and delivery services to local areas.

On the East side of the world, and specifically in China, According to Starbucks’s stories website, Starting from the Chinese New Year, on January 25th 2020, the company started to take actions toward the covid-19 crisis and develop possible scenarios for any upcoming crisis and how they’re going to deal with it.

Therefore, their first decision after cleaning and sanitizing all the stores regularly, was to close them for a period of time, to keep their employees’ health safe. They made sure every employee gets paid at their lockdown.

They made an insurance subscription for all the employees just in case any of them got infected or tested positive for the virus.

 

the East side of the world

The mental health of the employees was on the company’s list as well, therefore, they offered their employees to be active on the employees’ app, thus they can assure the company they are in good health and ask for assistance if they needed it.

Starbucks developed online leadership sessions for the employees, just to keep them in touch and keep their family-bond active.

Last but not least, the prevented the traditional way of communication between the customer and the employee. They followed a new strategy of making contactless orders. In which the customer can make their order throw the Starbucks application and pay through it as well. When the customer goes to the store to pick their order, their temperature is being checked before entering. When they get in the store, their beverage will be waiting for them on the beverage and pay station (which has been moved to the front of the store), they take it and leave, with no single contact with anyone.

Middle East Actions

Starbucks energized using their pages on the social media (Facebook and Instagram) “Starbucks Middle east” to interact with their audience and help them get over their stress during the covid-19 period. Moreover, made a new service to reduce the crowd inside the stores, in which the employee delivers the customer’s order in their car without them having to get out of the car and get inside the store to order their drink/snack.

Unlike most businesses in MEA just thinking about the financial aspect of the crisis Starbucks thoughts of the wellbeing of their Partners (Employees) and their clients.  

Digital media campaign

The company posted supportive words for its audience to make it easier for them both globally and locally.

Starbucks energized using their pages

Published posts to thank the doctors and nurses fighting covid-19. Mentioning that they prioritize others over themselves in such hard times on Facebook.

Social Media played a great role during this time as covid-19 related posts were mostly about reassuring their audience that everything will be okay and mentioning that some of their stores are still opened if they want to visit on Facebook.

covid-19 related posts

Working on the emotional side and keeping it active during the lockdown with posts on how to enjoy the quarantine and make rich coffee cups at home.

Also, they posted a video about their new service which is the new barista.

Last but not least, they posted how grateful they feel toward the nurses and doctors fighting covid-19, therefore they’re giving a free cup of coffee to all the front-liners fighting the virus.

Conclusion...

Starbucks has made a great example on putting their believes in actions, build CSR that create a why people loves Starbucks and take it as lifestyle not just a coffee, this was built within the company, mindset.

Any business should be putting the efforts to endeavor the same, putting the right Organizational behavior and culture, in Pinnacle our Organizational consultation services help companies to build their core cause and support spreading this in the mindset of employees and clients through trainings, coaching and PR Services and marketing campaign.

Setting the right goals is not enough, and bottom line profitability is creating cruel management that only think on the profit of the shareholders despite of all stakeholders involved in the equation; In Pinnacle our Balanced Score Card consultancy and ability to build triple bottom line objectives will help your organization perform better and for a cause.

In Pinnacle we understand the challenges business face with the current dynamics, we have been helping organizations big and small to be able to face the storm of economic effect of Coronavirus by being able to assess the situation based on Lean Six Sigma methodology, then define the best strategy moving forward.

Please use contact us and one of our business development managers will be calling you to support

Pinnacle® is a multi-country consultancy firm. Our consultants are spread around the world; with 70% of our consultants are women. We have built our organization on modern business model with agility, diversity, and resilience to the business dynamics. We have chosen our technology platform to support our modern mindset thus we work from anywhere …. As work is not a place anymore. We implement Lean Six Sigma in everything we do whether internally or externally at our client sites. 

This article is written by:
Mahitab Ahmed​
Mahitab Ahmed
Pinnacle, Centennials Consultant
Pinnacle Ltd.

Pinnacle Ltd. is a multi-countries modern consultancy firm, with offices around 13 countries in 4 continents, and 34 consultants working remotely and virtually managed.

Comments are closed.