Coffee talk: Katie Couric interviews Starbucks CEO Howard Schultz tonight
Did you think you'd live to see the day that Starbucks looked like anything less than a juggernaut of caffeinated world domination? I certainly didn't. But now that the bleak landscape of recession has made the act of ordering a $4.39 venti latte seem a bit gauche, Starbucks is suffering. With things not likely to look up anytime soon, the company recently announced that it would close 600 stores and slash more than 1,000 jobs.
Tonight on the "CBS Evening News With Katie Couric," Couric (whose star has risen significantly since her famous interview with Alaska Gov. Sarah Palin) grills Starbucks Chief Executive Howard Schultz about the future of the company brand. The transcript is below. Be sure to take a moment to appreciate the grande-sized groaners written into the script, including Couric's hard-hitting observation: "Starbucks is finding that getting back to its venti-sized profits could be a tall order."
COURIC: No company is immune from the impact of the recession, not even the one-time darling of Wall Street -- Starbucks. Same-store sales in this country have dropped 9% since the end of September. Starbucks is finding that getting back to its venti-sized profits could be a tall order. I talked with Starbucks CEO Howard Schultz in an exclusive interview.
COURIC: He's the king of coffee who oversees the more than 16,000 Starbucks worldwide and for putting lingo like this…
SCHULTZ: Can I have a doppio espresso macchiato?
COURIC: A what?
COURIC: …into the lexicon.
COURIC: Why can't you say small, medium and large like normal people?
SCHULTZ: It just what happened. I went to Italy and saw these names and it just made sense. And now people tell me there are over 70,000 different ways that our customers can order a Starbucks coffee.
COURIC: All, according to Schultz, make up the Starbucks experience.
But today, this Wall Street star, now seen as an everyday symbol of "Grande Indulgence," is struggling. The company recently announced that it would close 600 underperforming stores in the U.S. and cut more than 1,000 jobs.
COURIC: Did you grow too big, too fast, do you think?
SCHULTZ: Well, I think in hindsight, if we knew what was going to happen with the economy, one can conclude yes.
COURIC: Did you have a business plan for a severe recession? And if not, why?
SCHULTZ: I don't think we had a business plan for the severity of what has taken place. History demonstrated to us that a downturn in the economy would not affect us, and in fact, we would be recession proof.
COURIC: But Schultz has learned the hard way. And now, a recession has made justifying a regular Starbucks run hard to swallow. In New York City, a venti latte at $4.39 a day adds up to over $1,500 a year.
SCHULTZ: We have seen people who perhaps are making a discretionary decision perhaps not to come in today because they don't have the money.
COURIC: Dunkin' Donuts is providing some strong competition. Once only in the Northeast, it’s expanding to Las Vegas, Dallas and the home of the original Starbucks, Seattle. It's trying to be the cup of Joe for the average Joe by mocking the Starbucks approach.
(Dunkin' Donuts ad customer explaining what she wants) L-A-R-G-E.
No. D-E-I-C-I. It's a Deici.
COURIC: Will you bring your prices down, when somebody says, "I can't afford a venti latte latte"?
SCHULTZ: We're selling more than just a cup of coffee.
COURIC: While Schultz says he will be offering discount cards and less pricey coffee -- he refuses to cut corners. In fact, he regrets some past moves like buying more efficient espresso machines and replacing couches with tables and chairs to accommodate more customers.
SCHULTZ: Those changes should not have been made. But there was so much pressure on our stores because so many customers were coming through and people were complaining about the speed of service.
COURIC: He’ll make some changes that could save the company more than $400 million, like cutting transportation costs and reducing waste. But he says his loyal customers who come in for much more than coffee won't even notice.
SCHULTZ: Post-9/11, we saw an immediate uptick in the amount of people in our stores, all over the country. People wanted that human connection. We are not going to fracture the Starbucks experience.
COURIC: Nor will he stop providing health insurance for all his employees, even part-timers -- something he strongly believes in after watching his father, a delivery driver in Brooklyn, suffer without health insurance.
This is responsible capitalism.
Can Starbucks keep its mission statement in this economy? Schultz says he's optimistic. But he's also realistic and offers would-be entrepreneurs this piece of advice.
SCHULTZ: Great opportunities can be and have been created during tough economic times. This may sound a bit naïve, but I got here by believing in big dreams. And I think if you're an entrepreneur, you've got to dream big and then dream bigger.
COURIC: And speaking of responsible capitalism, philanthropy is an important part of the Starbucks brand. In October, 10,000 managers traveled to New Orleans and put in 60,000 hours of community service. Starbucks is helping farmers in Costa Rica, Ethiopia and Rwanda. And they're donating millions of dollars to AIDS victims in Africa.
-- Jessica Gelt
Transcript provided by the "CBS Evening News with Katie Couric". Photo credit: Justin Sullivan/Getty Images.