I bought this book because I am going to open a beer and wine bar. I thought that our respective business models are the same: Offer the customer a good place to hang out and have a drink.
I think no one understands this business model better than Schultz.
Even though there is no shortage of Schultz telling you in the book “It’s the best coffee, it’s the best coffee…” for me, and I have always known this, it’s less about the coffee and more about the coffee culture.
When Starbucks came to my town, Santa Monica, CA, they opened a store inside a book store (Barnes & Noble). Until that day, some 30 years ago, a book lover was never allowed to sit in a chair and read from one of their books for 20 minutes. Until that day, a book browser was never allow to bring food and drink into the store. That day, not only was food and drink permissible, they gave you a soft, comfy leather chair to sink into to sip and read. Although the coffee is good, I learned their business model is about coffee culture, not the coffee.
In Los Angeles, there are two rivals, Starbucks and Coffee Bean and Tea Leaf (CBTL). The CBTL people HATE Starbucks and will use any opportunity to tell you what they think of Starbucks. If I have heard this comment once (usually unsolicited), I have heard it a thousand times “CBTL coffee tastes better than Starbucks coffee.” Whenever they say this, I always think “Who asked for your opinion?” It’s arrogant, stupid, and not true (best coffee). And while we are at it, aren’t you CBTL people supposed to stand for the opposite of arrogance? You can generalize the CBTL crowd to be the tree-hugging, Birkenstock-wearing crowd. The Starbucks people don’t hate the CBTL people, we just avoid the store. I have never heard one Starbucks customer denigrate CTBL coffee or the coffeehouse.
As for the coffee, I hate CBTL coffee. In a 30 day period, I maybe, and I say maybe, giving the utmost benefit of the doubt, like (not love) their (drip) coffee one day out of 30. When I go to Starbucks, my drink order is Grande, non-fat, Café Latte. I agree that during the non-Schultz days, the drink could be a bit inconsistent. On Schultz’ watch, it is a very consistent, satisfying drink. If I’m going to be honest, the best (drip) coffee in the world is in Kings Road Cafe West Hollywood. Now that’s coffee! Which is why I cannot listen to the CBTL line about the coffee.
Why do I go to Starbucks? Because I like the atmosphere. The décor is inviting. It invites you to be comfortable and stay a while. You can go to read the morning news, work on a report, do your homework, or enjoy a cup with a friend. Much to my chagrin, my husband is a CBTL fan. For the last 6 years, we have gone to CBTL every Friday, Saturday, and Sunday. I order a plain drip (dark) when I go to CBTL. In 6 years, they don’t know my name, they don’t know what my drink order is (Hello? Unlike Starbucks’ 3,000 different drink orders – which might be a challenge, I order Plain coffee. What’s to remember?) Forget that they don’t know my name, they don’t even recognize that I have been in the store more than once. 6 years, people! 6 years!
The décor is the same décor from the day they opened. The place is dirty, dingy, and the furniture is often broken. The bathroom mirror has graffiti. I give them points because they have a professional window cleaner once a week. The outdoor tables are never cleaned in the morning. They have a thick layer of dust, leaves, and blown debris from the street sweepers. They should be cleaned every, damn morning to welcome customers.
Anyway, back to the book…who else to teach you about culture than Schultz? On his return to Starbucks, the country was facing the worst recession since the Great Depression. In just two years, he took the stock price from $8 to $33, a 400% increase…despite the recession!
I liked hearing cold, hard numbers on his sales-to-investment ratios (page 152). I definitely will implement those numbers. I like the ‘Lean’ philosophy where you let individual managers come up with better ways to build the mousetrap. In their corporate manual, they had to grind the day’s beans first thing in the morning. This resulted in lots of waste at the end of the day. One manager switched to grinding just before brewing. This resulted in a fresh brew, no waste, and a coffee smell (to lure more customers) throughout the day. They were usually out of decaf. One manager came up with a plan to never run out of decaf. The Lean technique is also a plan I will implement.
I agree with his line that “leadership is about confidence”. You have to have passion, which he does, about your convictions. As a leader, sometimes, no one understands or endorses your convictions than you. Passion gives you the ability to press forward anyway.
When they implemented a customer loyalty card, they were going to include customer preferences when the card was swiped at the terminal. I talked to a few stores after reading the book. They have the card but there are no customer preferences. I am going to talk to my IT people to see if this can be implemented as I think it’s very important. Much like Blackberry contacts had fields for business people, even adding one line of customization will be a tremendous bonus to a customer. Bottom line? Customers want to be recognized and appreciated. The coffee or the product comes second. Unlike the famous Seinfeld Soup Nazi episode, people don’t want to be dissed, or worse, ignored, no matter how good the product is.
One singular thing that made me successful in business was to CONNECT with people. I speak to this concept a great deal in my book below. Even though Schultz talks about the quality of the coffee, which I am glad this is his benchmark, you will find threaded throughout the book, just how deeply he connects with people. He does it so well, he is almost removed to give it any credit. I promise you, three times in the book, I was actually crying and had tear stains on the pages of the book. When’s the last time you cried while reading? Thought so.
I recommend this book to any business person to learn how he quadrupled his business in 2 years. There is take-away that will be helpful for any business. I just looked today, the stock price is $75.