Built the first mainstream coffee culture for middle America, turning tea-drinking masses into latte enthusiasts. Grew from 6 stores to 15,000 worldwide by 2007. Created the 'third place' — warm chairs, free Wi-Fi, a welcoming destination beyond home and work.
What Changed
Schultz doubled down on mobile ordering and drive-throughs — 70% of transactions now skip the 'third place' entirely. Got dragged into politics, homeless crises, and union battles. Meanwhile, stores became mosh pits of mobile orders with 15-30 minute waits. China growth collapsed as Luckin tripled their store count at half the price.
Where it Landed
Revenue down 6%, transactions down 10%, profits down 47%. Six straight quarters of declining same-store sales. New CEO Niccol cutting 1,000 corporate jobs and bringing back ceramic mugs. Stock still at 2012 levels. Turnaround uncertain.
The Principles
1.
Know your core job. Starbucks forgot they existed to serve coffee and create community — not to be a politics platform or pure e-commerce play.
2.
Efficiency can kill experience. Drive-throughs and mobile apps boosted throughput but destroyed the 'third place' soul that built the brand.
3.
You can't outsource safety to politics. Open bathroom policies made stores unsafe, driving away paying customers who just wanted coffee in peace.
Builder's Takeaway
If you're building a premium experience brand, remember:
•
Your physical space IS the product — don't optimize it away for speed
•
Politics alienates half your customers every single time, no exceptions
