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1-Page Summary of Losing It
Introduction
Starbucks closed all of its stores for a day to retrain their employees. This was costly, as well as controversial and bad publicity. Competitors made fun of them by offering 99 cent cups of coffee that day, but Starbucks did it anyway because they knew it was the right thing to do.
But the shutdown of Starbucks for a day was nothing compared to the years of decline that it had been experiencing. The CEO, Howard Schultz, wanted to bring back Starbucks from its brink of extinction. He did this by shutting down all locations and re-training employees on how to make drinks correctly. This paid off in the end with increased sales after customers were happy with their new experience at Starbucks.
Starbucks used to be the most successful coffee company in the world, but it lost its way. It changed hands and suffered from low quality services, which led to a decline in sales. However, Starbucks recovered by listening to customers and putting people before profits. Schultz saved Starbucks by creating a unified vision that inspired employees and customers alike.
How Schultz Made Starbucks What it is Today
Howard Schultz grew up in the projects of Brooklyn and paid his way through college. He moved to Seattle to work at a coffee company called Starbucks, where he was head of marketing. At the time, they sold only coffee beans and grounds but not prepared beverages. Schultz discovered his passion for espresso while on a business trip in Italy, which inspired him to create strong connections with people over coffee.
Howard Schultz wanted to bring the romance of Italian coffee shops to America, so he left Starbucks and started his own company. He opened two espresso bars in Seattle and one in Canada. With investors’ help, he bought Starbucks’ six stores and roasting plant, merged them with his espresso bars, called the new company
After running Starbucks for 15 years, Schultz realized that the company was doing well in America, but he wanted to do more. So, he stepped down from his role as CEO and became chairman of the board. During this time, Schultz helped expand Starbucks internationally to places like Saudi Arabia and Australia by helping them open stores all over the world. Meanwhile, they also began delivering coffee in communities around America and buying fair trade certified products for their stores.
How Starbucks’ Services Got Watered Down
Starbucks once focused on quality, but over time they started focusing more on growth. They grew from 1,000 stores to 13,000 in a few years so that they could serve more people. In pursuit of efficiency, Starbucks leaders started doing things like outfitting their stores with tall espresso machines and pre-ground coffee rather than grinding the beans themselves at each store. This led to baristas being stuck with long working hours and too much work for one person to handle.
Additionally, Starbucks’ on-boarding process became watered down to rudimentary training and demands to read a thick three-ring binder of rules. Partners began noticing inconsistencies in their performance reviews and pay raises. As a result, partners disconnected from customers they were serving and became disenchanted with the work environment. The drinks stopped tasting as good for customers, too.
In 2006, the amount each customer spent at Starbucks began to decline. The company continued to open stores and expand its business despite this problem. However, in 2007 the company’s stock dropped 42% and by December of that year it was reporting negative daily comps. In other words, sales were declining and performance was dropping dramatically; the company was in serious trouble.
