Starbucks\' architect seeks to reclaim its legacy

Tag : coffee machines

Last December, while plotting his return as chief executive,Schultz met Rubinfeld at - where else? - a Starbucks, in theaffluent Madison Park neighborhood of Seattle, and asked him toresume his old duties.
"I was concerned and a little upset at where our legacy could haveended up," Rubinfeld said, describing his decision to accept theoffer. "Everything about the company was being defined by others."
Nearly a year later, that has not changed, and the company isincreasingly seen as a fading symbol of an overexuberant age. WallStreet analysts and investors continue to disparage Starbucks,citing self-inflicted wounds like overexpansion and mediocre food.
The company's fortunes seem to be waning by the day. It is beingsqueezed by rivals like McDonald's and Dunkin' Donuts, which havestarted offering lower-price espresso drinks, and by a falteringeconomy that is prompting consumers to reconsider their $3.65-a-daycaramel macchiato kick.
In an interview last week, Schultz said that the number ofcustomers in Starbucks stores had declined compared with last yearbut that the trend appeared to have bottomed out. He argued thatthe company was in a better position than most to navigate arecession, largely because it had already decided to close 600stores in the United States and lay off 1,000 workers this year.
"We believe we are more relevant to our customers than ever beforebecause of what we are all facing," Schultz said, arguing that hiscafés could be a refuge from the economic storm. "We are notselling a commodity cup of coffee. We have created a uniqueexperience."
Schultz met Rubinfeld 30 years ago when they were bachelors andneighbors in the same New York apartment building. Today, the tworemain so friendly that they close personal e-mail messages to eachother with the word "love."
Rubinfeld's touchy-feely camaraderie and unwavering smile mask hisexasperation over Starbucks' recent setbacks. In particular, hefeels that the company has been treated unfairly by the news mediaand critics who disparage its coffee and accuse it ofenvironmentally incautious practices like wasting water. (Starbucksprides itself on its progressive policies. It said Wednesday thatit was doubling its purchase of farmer-friendly "Fair Trade" coffeeand donating to the RED philanthropy campaign.)
But Rubinfeld acknowledges that in its relentless expansion toaround 17,000 stores, Starbucks overlooked the costs to itsreputation of generic, cookie-cutter designs and of placing storesin dreary suburban strip malls.
"We did not have the discipline to say no," he said. "The issue wasour failure to say, 'That store in that location should not beopened."'
Now that he is again leading Starbucks' real estate team, Rubinfeldsays he will focus on adding stores to urban areas, where there isalready a near-saturation of the coffee market, but also apreponderance of affluent young professionals who subsist on fancycoffee drinks.
Rubinfeld said Starbucks would begin to tailor new stores tospecific neighborhoods. For example, it could create some stores inupscale neighborhoods that drop frilly drinks like Frappuccinos andsell only coffee beans and high-end espresso drinks - similar toStarbucks' original store at Pike Place Market in Seattle. Thatwould serve to "reinforce our brand's position as a purveyor ofhigh-quality coffees of the world," he said.
Underlying all new store openings will be a strict commitment tosales targets. "I will look into the eyes of senior managers, andthey will be directly accountable," Rubinfeld said. "That personhas to know a new store will hit its first-year sales goals."
He also wants to change the inside of Starbucks stores. Last week,he presented a new design to the company's regional managers.Elements of it, like energy-efficient lighting, new furniture usingreclaimed materials and modular merchandising racks to display thegrowing array of Starbucks products, will begin appearing in storesacross the United States later this year. So will new paintingsthat evoke the company's coffee heritage - as opposed to whatRubinfeld calls the generic "Pier 1 art" dotting some store wallsnow.