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Starbucks CEO Howard Schultz
Starbucks CEO Howard Schultz

Starbucks CEO: Restaurants must give back

This is part of NRN’s special coverage of the 2013 NRA Show, being held in Chicago, May 18-21. For the latest coverage from the show visit NRN’s NRA Show page and NRN's editor blogs, plus follow @NRNonline on Twitter. Also find the most compelling digital buzz from the show in one place at NRN's new social media hub.

Restaurants and other American businesses cannot fix every problem in a country affected by a struggling economy and dysfunctional politics, but they can contribute to solutions by balancing their drive for profitability with a greater sense of social conscience, Starbucks Coffee chief executive Howard Schultz said during his keynote speech to NRA Show attendees. Above all, he said, they must not be bystanders.

“We have to stand up and be accountable,” Schultz said. “We have to do more for our people, we have to do more for our communities, and I think we in a way are living proof that … you can share success with your people, bring them along, and create followers and believers because they’re part of something larger than themselves.”

Schultz tied Starbucks’ commitments to its employees and their communities to the Seattle-based company’s own recovery from the recession of 2007 and 2008. At the nearly 19,000-unit chain’s lowest point in 2008, Starbucks’ same-store sales sank to an 8.4-percent decrease.

He decided to gather all the company’s store managers for one meeting, in Hurricane Katrina-ravaged New Orleans, to refocus the brand on the customer service that built Starbucks but that had been lost when its leaders concentrated too much on growing same-store sales and the company’s share price. The cost of convening everyone ran more than $32 million.

But in his “$33 million speech” to Starbucks’ managers, Schultz challenged the company to rethink what it truly means to be great and accountable, he said.

“We made the mistake in 2007 and 2008 of talking about millions of customers per week and thousands of stores,” he said. “That’s ridiculous. We don’t have a company of thousands of stores and millions of customers. The moment of truth for Starbucks and all of you is one customer, one Starbucks partner wearing the green apron and one extraordinary experience based on the best-tasting coffee on the planet.”

He encouraged Starbucks partners and attendees to overachieve on every potential experience with a customer, repeating that they must not be bystanders.

“There are a hundred things that happen, maybe a thousand, in a Starbucks store every day,” Schultz said. “The question is, how many things do you see that are just on the edge of mediocrity, just not good enough, that we overlook?”

For restaurant employees to achieve that ideal level of service above customer expectations, their company executives and managers must exceed the expectations partners have for their leadership, Schultz said. The brand’s success is linked to values that make partners proud to work for Starbucks and customers want to support it, he added.

“We want to create a connection with our customers that’s not based only on trying to ring the register but demonstrating a heartfelt commitment to communities we serve and where our customers live,” he said.

That ambition now drives Schultz to raise funds for small-business growth with the Create Jobs for USA campaign or maintain benefits like stock options or health insurance coverage for employees, but it started much earlier, in the housing projects of Brooklyn, N.Y., where he grew up. He shared the formative experience of his father breaking his hip and leg in a workplace accident and being left with no safety net.

“At the age of 7, I witnessed firsthand hopelessness, the fracturing of dreams and aspirations, and it scarred me,” he said. “I never dreamed one day that I’d have the opportunity to build a company or institution, but because of the greatness and promise of the entrepreneurial dream in America, which is still alive today, I was given that chance. In many ways I’ve tried to build the kind of company that my father never got a chance to work for.”

Contact Mark Brandau at [email protected]
Follow him on Twitter: @Mark_from_NRN

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