I’ve been saying this for a few months now to anyone who will lend me an ear: I think Starbucks is experiencing a renaissance of sorts. I think it’s a company (and stock) worth watching and it seems the NY Times agrees; they’re calling it a rebound.
My interest in coffee shops and coffee in general began at a young age with my grandfather who is one of my greatest heroes. He used to pick me up from school and take me to Peet’s Coffee next to the Claremont Hotel in Berekeley, CA, nearly 20 years before Peet’s became a national company and coffee shops became a publicly traded phenomenon. I remember the confusion and delight on the barista’s face when I, as a child, would walk up to the counter and order a cup of coffee (half milk, half coffee) with a brownie that I could never finish.
For the longest time I viewed Starbucks as the “anti-Christ” and Peet’s as the “savior.” Both started out from the same roots, but one sold it’s soul to the devil in return for rapid growth and stock dividends (read: Starbucks), while the other (read: Peet’s) stayed true to the Coffee gospel and kept preaching to the same tune: artisanally roasted beans with greater depth, knowledgeable employees, and a more “personal” feel. Although that may have been and still continues to be true to a great extent, I sense a change. I think Starbucks is getting (some of) its soul back.
I don’t seem to be alone in this opinion. Just a couple weeks ago the New York Times quoted Howard Shultz as saying:
“We lost our way,” he said. “We went back to start-up mode, hand-to-hand combat every day” to find it. “And with the kind of discussion and focus that probably we had not had as a company since the early days — the fear of failure, the hunger to win.”
It’s been over two years since Shultz took back the helm at Starbucks and as the NYT reported, he’s come “to turn the struggling company around by injecting the multinational chain with a dose of the urgency, nimbleness and risk-taking of a start-up company.” Sound familiar? CEO leaves large company with cult like following, company goes corporate, company doesn’t evolve to meet changing demands, company loses its direction and profitability, company brings back it’s “visionary” CEO to reestablish the brand, new CEO shakes things up, starts preaching again and tries to win new converts while using deep metaphors for his company’s products like “the authenticity of the coffee experience” and “the romance, the theater of bringing that to life.” Replace “company” with “Apple Computers” and CEO with “Steve Jobs” and you’ll get a sense of where I’m going with this. Could Starbucks be experiencing a renaissance, headed by their “Jobsian” leader, Howard Shultz, the same way Apple did in the late 1990s? Maybe.
I know the analogy is a bit of a stretch, but there are some definite similarities (buy me a cup of coffee and I’ll be happy to run through the list with you) that I think make Starbucks a company and a stock to watch. Take a trip to your local Starbucks, order a cup of coffee, and see if you notice what I’m talking about and then let’s revisit this post in a couple years to see what Starbucks stock is trading at (as of January 29th, the 52 week high for SBUX is $24.45).