Starbucks CEO: Can You 'Get Big And Stay Small'? In 2008, the faltering economy sent Starbucks a wake up call. Former CEO Howard Schultz returned to the company's helm, and led the coffee giant in some corporate soul searching. He describes the process in his new book, Onward: How Starbucks Fought For Its Life Without Losing Its Soul.
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Starbucks CEO: Can You 'Get Big And Stay Small'?

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Starbucks CEO: Can You 'Get Big And Stay Small'?

Starbucks CEO: Can You 'Get Big And Stay Small'?

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LINDA WERTHEIMER, Host:

In the world of business, CEOs come and go, but some CEOs go and come back. Think of Steve Jobs, who came back to rescue Apple. And when the giant coffee shop chain Starbucks was faltering in 2008, its former CEO came back.

HOWARD SCHULTZ: We needed to go back to the core principles of our company, which was really based on a passionate commitment to source and roast the highest quality coffee in the world and deliver it perfectly to our customers. And I didn't think we were doing that as well at the time as we did in the past.

WERTHEIMER: Howard Schultz is still CEO of the company. He has a new book out called "Onward: How Starbucks Fought For its Life Without Losing its Soul." He joined us to talk about how fixing the company meant changes right down to how baristas steam the milk.

SCHULTZ: You don't want to re-steam milk when you're making a perfect shot of espresso. You want to make a perfect shot of espresso, steam the milk, and if you have anything left over, just pour it out and make another great cappuccino or cafe latte. That's an example. And I think we were doing things like that, which produced a higher yield or higher profitability, but I just felt it wasn't consistent with the commitment we've always had about making the perfect shot of espresso. It's thing like that.

WERTHEIMER: I know that some of the things that you tried, you've pulled back on.

SCHULTZ: Yes.

WERTHEIMER: Like, for example, breakfast sandwiches. I liked your breakfast sandwiches. I have to say, I thought they were awfully good and...

SCHULTZ: Well, the breakfast sandwiches were selling extremely well, but at the time, there was an aroma in the stores that I felt was kind of diluting the integrity of the coffee romance and the aroma of coffee. So we took the breakfast sandwiches out...

WERTHEIMER: You're talking what? You're talking bacon, cheese or something?

SCHULTZ: Yeah. Bacon, cheese sandwiches, things of that nature. We took them out and reconfigured how we're going to do that, and then brought them back less than a year later. And they've been more successful now than ever before.

WERTHEIMER: When you look at Starbucks, though, aren't you really basically looking at a huge chain, like McDonald's? You want every Starbucks to be like every other Starbucks, and it seems to me it would be impossible to do that without losing a little bit of that coffee experience.

SCHULTZ: And I also go back to the fact that not unlike the English pub in the U.K., Starbucks really has created something quite important in America and all around the world, and that is this third place between home and work, an extension of people's lives, at a time when people have no place to go.

WERTHEIMER: Starbucks made a huge point of offering health care to all of its employees, even the part-time employees, and obviously, the costs have gone up and up and up. As you move ahead, what's your feeling about health care? Do you think the new health care bill's going to help you or hurt you? Are you going to be able to keep doing this?

SCHULTZ: Going forward, we are deeply committed to maintaining that benefit, and we'll continue to do so. As we approached 2014 and the health care bill becomes law, I would hope that there would be some refinements in which the mandates that are in place would be looked at in a way that would not penalize those companies that are doing the right thing.

WERTHEIMER: What's the change you want?

SCHULTZ: Well, I think specifically, as the bill is currently written, as I understand it, there are mandates that will increase the cost of covering our existing employees.

WERTHEIMER: Such as?

SCHULTZ: A good example of that is a certain person at Starbucks may decide if he or she is 22 or 25 years old, that their parents' health care is better or they're more inclined to accept that. In the new bill, we would be mandated whether they wanted to or not, to cover that employee. That doesn't seem to be the right thing at all.

WERTHEIMER: So if Starbucks comes to a point where you feel it's really rock and roll again...

SCHULTZ: Well, it is rock and roll again.

WERTHEIMER: Okay.

(SOUNDBITE OF LAUGHTER)

WERTHEIMER: So are you thinking maybe you'll, you know, go on a nice, long trip or climb a mountain or something, retire again?

SCHULTZ: Well, I think over the last three years, we've completely transformed the company, and the health of Starbucks, I think, is quite good. But I don't think this is a time to celebrate or run some victory lap. We've got a lot of work to do, and I'm deeply committed to our company and our shareholders and have no intent, in the short-term, of leaving.

WERTHEIMER: In the short-term.

SCHULTZ: In the short-term.

WERTHEIMER: Mr. Schultz, thank you very much.

SCHULTZ: Thank you so much for having me.

WERTHEIMER: Howard Schultz, he is the CEO of Starbucks. And his new book is called "Onward: How Starbucks Fought For its Life Without Losing its Soul."

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