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STARBUCKS

Ariff Kachra prepared this case under the supervision of Professor Mary Crossan solely to provide material for class discussion.
The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality.
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Version: (A) 2009-09-09

Mr. Howard Schultz, the Chairman and CEO of Starbucks Corporation, had just given a speech on the future of the coffee industry at a well-known business school. As he left the lecture hall, he stopped at the
University’s most popular coffee shop, the Brewery. The shop’s sign indicated that it was “Now Serving
Starbucks Coffee.” As Mr. Schultz ordered the House Blend, he noticed that the Brewery was a far cry from any Starbucks coffeehouse. The shop was messy, the service was poor, and the coffee was average.
As Mr. Schultz was leaving the Brewery, Orin Smith, Starbucks President and COO, called him on his cellular phone. McDonald’s, whom Starbucks had turned down a number of times, was once again petitioning for a contract to serve Starbucks coffee. On the plane back to Seattle, Washington, Mr.
Schultz’s thoughts drifted back to his experience at the Brewery and the call from McDonald’s. He asked himself two questions: Was Starbucks growing in the best way possible? Was Starbucks overextending in its quest for growth?
SPECIALTY COFFEE