Starbucks meeting still steamy, if a little weak

Allison Linn Senior writer • Profile • E-mail

Starbucks Corp.'s annual shareholders meeting is typically as much a cheerleading session as an investor powwow, marked by song-and-dance routines, earnest employee testimonials and a host of other feel-good performances.

And, oh yeah, there’s free coffee.

It wouldn't be fair to say that this year’s shindig, held Wednesday in Seattle, was exactly somber. Still, it wasn’t hard to catch the faint whiff of anxiety among the top executives, and who could really blame them?

Shares in Starbucks have fallen more than 10 percent over the past year, amid concerns over whether the company can maintain its brisk store growth and reach its aggressive revenue targets without diluting its brand or making any other major missteps.

Those concerns were significantly exacerbated a few weeks ago, when a memo surfaced from the company’s chairman and most public face, Howard Schultz.

Writing to top executives, Schultz openly fretted about whether Starbucks’ brand is being watered down by steps the company took during its explosive growth, such as adding automated espresso machines and using pre-ground, pre-packaged coffee in stores. Both moves have robbed the stores of some of their aroma and romance, but have allowed customers to get their caffeine fix more quickly.

Starbucks has sought to downplay the hubbub, with Schultz on Wednesday again arguing that the memo was meant to prompt reflection rather than to spur wholesale changes.

“I am challenging the status quo at Starbucks,” he said.

Schultz also insisted Wednesday that Starbucks will not back down from its growth plan, which calls for eventually having 40,000 stores worldwide, up from around 14,000 today.

Nevertheless, executives told investors the company does plan to start reemphasizing the importance of its core product — coffee. Schultz also said the company was talking about other things that could make Starbucks’ stores seem less cookie-cutter, including finding ways each one can better reflect local communities.

Such individuality can be tough to achieve when a company is opening up seven stores per day, hiring about 400 people each day and drawing its popularity in part from the fact that people can expect a similar experience no matter whether they are at Starbucks in Dubai, Dublin or Detroit.

And really, would bringing back more manual espresso machines — which is unrealistic at this point anyway — really make customers happier?

If asked, plenty of people would likely say they’d love to smell the coffee as it was being ground just for their drink. But would they be willing to wait an extra minute — or two or five or 10 — so everyone in line could have that experience? Probably not.

Also, an increasing number of Starbucks loyalists now wait for their coffee behind a steering wheel, with nothing better to smell than the fumes of the car in front of them.

Does that make Starbucks’ drive-thrus bad? Certainly they aren’t in keeping with Starbucks’ legendary idea of creating a “third place,” full of comfy chairs where people can study, socialize or just escape home and work. But drive-thrus do provide a convenience for busy commuters and harried parents who want a premium cup of coffee and don’t want to get out of their car.

In fact, Starbucks Chief Executive Jim Donald said Wednesday, for those people the drive-thru has become a sort of third place in and of itself.

In other words, it’s hard to fault Starbucks for finding — and serving — a customer base, no matter how distasteful it may seem to coffee purists.

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