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STEVE INSKEEP, host:

Now overseas expansion is causing trouble for another American corporation -Starbucks. We'll turn to the company's trouble in China in just a moment. First we go to Starbucks' hometown, Seattle. NPR's Wendy Kaufman reports that the company's expansion is causing concern at the top.

WENDY KAUFMAN: Here inside one of Starbucks' 13,000 stores, the aroma of fresh ground coffee beans is missing. The romance and showmanship of a handmade latte has been replaced by an automated espresso machine. These observations come from none other than company CEO, Howard Schultz. In a recent e-mail he bemoaned that company stores have lost their soul. He urged his staff to get back to the core and make changes necessary to evoke Starbucks' heritage and tradition.

But while Schultz was complaining that the rapid expansion had come with a cost, the company is actually accelerating the rate at which it's adding new stores. And says Bob Goldin, executive vice president of Technomic, a major food industry research and consulting firm:

Mr. BOB GOLDIN (Executive Vice President, Technomic): If you go back about three, four years, they upped their unit forecast several times. I think at one point they were talking about having 25,000. Now they're talking about 40, which is, you know, kind of a staggering number.

KAUFMAN: That's right, about 40,000 Starbucks stores. The company says about half will be in the United States, the rest abroad.

In addition to the flap caused by Schultz's e-mail, Starbucks has been criticized recently for not paying enough money to some African farmers. And the company had the embarrassing Consumer Reports taste test that rated McDonalds coffee better than Starbucks.

On the other hand, last week "Fortune" magazine declared that Starbucks was one of the most admired companies in America, ranking it number two. And longtime investors are probably pretty happy, although the stock has slipped since the beginning of the year. A $1,000 investment at the initial public offering in 1992 was worth more than $50,000 at the end of last year.

Wendy Kaufman, NPR News, Seattle.

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