Starbuckslast week brought its biennial investor day back to its Seattle headquarters for the first time in 10 years. The presentation offered a glimpse into not just the company's plans, but the underlying values that drive Starbucks.
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CEO Howard Schultz kicked off the day, and his remarks highlighted his unique approach to growing the brandin a way that considers the company's impact on the world.
"As we assemble here today there are over 21,000 Starbucks stores in 66 countries serving over 70 million customers a week," Schultz said in opening his speech. "And we are now employing over 300,000 Starbucks partners who proudly wear the green apron all over the world."
Read on for some insight from Schultz.
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CEO Howard Schultz was the lead speaker at Starbucks' investor day. Source: Starbucks.
It's not all about money
Schultz's Starbucks has always been about more than just profits -- something that was highlighted in the film that played before the CEO took the stage. The movie began with a long scroll explaining the commitment Starbucks has made over the past 18 months to helping "support post-9/11 veterans and their families with their transition to civilian life."
As part of that effort, company leaders have visited military bases around the world in an attempt to better understand the challenges facing troops as they return to civilian life. That led Starbucks to committo hiring 10,000 veterans and military spouses over the next four years. The Schultz Family Foundation also donated $30 million to support returning veterans with employment and in other parts of of their post-military life. The CEO co-authored a book, For Love of Country, and donated all proceeds from its sale to veterans service organizations.
"For all of us at Starbucks, it's who we are and what we believe in," Schultz said. "The long history of Starbucks is steeped in trying to recognize that we were build[ing] a different type of business proposition since day one. Not better than any other company, but slightly different. That was the achievement of the balance of profitability and a social conscience."
Essentially, Schultz explained that being good citizens and giving back part of the corporate DNA actually enhances the bottom line. It's not a direct link, more an organic realization of the idea that if you do good things, then good things will happen to you.
Trust is key
Schultz highlighted the idea that "the world is very fragile these days, and that can affect consumer confidence." He said the most important currency in building and growing a brand is consumer trust, and that he believes everything Starbucks does as a company must be linked to the idea of building trust.
"There are very few companies our size doing close to $17 billion in revenue at an average ticket of around $5. As a result of that there is no company as dependent as we are on human behavior, the human condition, and the people that wear the green apron," according to the CEO.
To maintain and grow that trust, Schultz believes his management team must make its employees proud of what the brand stands for, and that requires ongoing "deposits in the reservoir of goodwill of Starbucks coffee company."
He also acknowledged that this philosophy does not always jibe perfectly with the quarterly reporting and the need to grow on a period-by period-basis required of a public company.
"In order to be a great and enduring company, we have to play the long game," Schultz said. "We have to make long term-investments in the strategies of the company while consistently developing the kind of short-term victories quarter to quarter that demonstrate we're meeting our responsibilities."
Starbucks has grown exponentially since when it had "11 stores, 100 employees, and a dream to create a national company," Schultz said. But, he added, it is important for the company, no matter its size, to remain true to its roots.
"We have to have the constant curiosity to see around corners and see things that other don't see and then have the courage and conviction to make big bets," he said.
Part of beingentrepreneurial is remaining nimble and being able to shift when the market does. Schultz noted the seismic shift in retail in whichconsumers are moving away from physical stores in favor of online shopping. This impacts Starbucks by lowering traffic to the malls, shopping plazas, and strip malls where many of its stores are located.
"Just a year ago, in the middle of the holiday season, we recognized that the status quo of operating the way we did a year ago was not going be good enough," he said. "And on Jan. 1, right after the holiday season, we scrapped all of the plans that were in place for 2014."
The company, which plans 12 to 18 months out, saw an increased need to drive traffic to its stores. One way the chain is doing that is with the "Starbucks for Life" contest, which will give 14 customers in the U.S. and Canada free coffee for life. The promotion -- which also offers other prizes -- requires using your Starbucks Card or Starbucks mobile app in-store, a strategy aimed at increasing foot traffic and membership in the chain's loyalty program.
Earn it every day
Schultz made clear in his presentation that he views how to build profit and drive growth in a very different way than many other CEOs. He also said past success does not entitle you to future success, which makes it obvious that he knows the brand will need to continue to evolve to serve a changing marketplace.
"We have to earn it and earn it every day," he said.
Schultz is not following a well-trodden path, but he also understands that helping the world, treating employees well, and building the company he envisions comes with a cost.
"Our financial performance is the price of admission," he said.
As a CEO, Schultz might sound like an idealist first and a businessman second, but he's using his values and the values he wants his brand to represent to organically drive growth. You can't fake what Schultz is preaching -- customers will sniff that out, ensuring failure. The Starbucks CEO clearly drinks the Kool-Aid, or in his case the espresso macchiato -- but so do millions of customers. That has been, and should continue to be, a revenue driver for the company.
The article 3 Things Starbucks CEO Howard Schultz Wants Investors to Know originally appeared on Fool.com.
Daniel Kline has no position in any stocks mentioned. He is an avid Starbucks drinker. The Motley Fool recommends Starbucks. The Motley Fool owns shares of Starbucks. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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