Free The Starbucks Story by John Simmons Page A

people (Howard Schultz among them) to use their abilities more effectively. Rather than fire-fighting when little things went wrong, the creative people in the company could concentrate on the issues that they could influence best. The front of store could look good and offer a great experience, but only because the back of store was functioning smoothly. Howard Schultz put it in this way: “In business, the front room is what the world sees: in our case, the coffee, the stores, the style, the brand. But the back room is where we win. The efficiency of the back room is really what’s made Starbucks a financial success.”
    By the end of the period leading up to 1992, certain truths about the Starbucks brand were becoming established. They were forced into the open by decisions that had to be made. One of these decisions – a key one for any brand – was about franchising. Given the rate of expansion envisaged, franchising would have been an easy option. Indeed, many competitors went the franchising route and grew faster than Starbucks at this time. Starbucks resisted the attraction of franchising because it could not then ensure the quality of its product and service. Similarly, other decisions were taken: not to flavor coffee beans artificially; not to use chemicals; not to sell beans through supermarkets. The wrong decisions would have led to a loss of product quality that would have undermined the brand. The right decisions were taken: to keep pursuing the perfect cup of coffee, using the best beans and roasting them to the high standards Starbucks had always set.
    Of these decisions, the rejection of franchising is perhaps the most significant for the Starbucks brand. It was one of many decisions, as I will explain in later chapters, where Starbucks leaned heavily on its understanding of its brand. With franchising, a business can grow more quickly and economically, but it sacrifices control. While retaining the external appearance of brand control through the application of visual identity, design formats and product sourcing, the company loses influence over the most important aspect of its brand: its people. It is a simple matter of who employs you: Starbucks or the franchisee? Which option will give you a more consistent brand?
    Starbucks decided for Starbucks and its own people. It is a distinctive aspect of the brand that it controls just about every interaction with the outside world, as opposed to, say, even a brand like Coca-Cola, which relinquishes its control in the outlets where it is sold. You do not need to go to a Coca-Cola shop to buy Coca-Cola. But you do go to a Starbucks kiosk or store to buy a Starbucks coffee. This is an unusual degree of vertical integration, but it springs from a fear that one bad cup of coffee, one bad experience, can fatally undermine the brand. It calls for an extraordinary attention to quality control at every stage of the process, from growing to sourcing to roasting to brewing to serving.
    Franchising was rejected because it would have weakened the Starbucks culture. Recruiting, training, communicating with people remain with Starbucks. But the purity of this approach could not be sustained indefinitely. In airports, for example, there is little option but to work through concessionaires. The first relationship was with Host Marriott in O’Hare airport, Chicago. Airports are natural, essential outlets for a brand like Starbucks: they bring the brand into contact with an international audience that then prepares the ground for international growth. Starbucks decided that it would operate through licensing in airports to achieve its development plans. So there was a retreat from control freakery towards a more balanced view, with the reins kept simultaneously loose and tight.
    The scene was set for the next stage. Starbucks was about to embark on a period of accelerated expansion. To do so, it decided it needed to go public: to raise funds through the stock market rather