Is Malaise Brewing at Starbucks?
Chairman Laments That Chain Has Lost 'Romance and Theatre'

By Blaine Harden
Washington Post Staff Writer
Sunday, March 4, 2007

SEATTLE -- Starbucks has lost its soul and does not know where to find it.

Starbucks Chairman Howard Schultz lamented as much in a recent internal memo to his executives. He wrote that as the world's largest specialty coffee company has expanded from fewer than 1,000 locations to about 13,000, its stores no longer even smell like coffee because of "flavor locked packaging."

His memo grieved, too, over the loss of "the romance and theatre" of traditional Italian espresso makers, which have been replaced by automatic machines. Shultz wrote that the new machines, while more efficient, block customers from watching as coffee drinks are made and sharing what he called an "intimate experience with the barista."

"One of the results has been stores that no longer have the soul of the past," he wrote. "Some people even call our stores sterile, cookie cutter, no longer reflecting the passion our partners feel about our coffee."

The leak of Schultz's lost-our-soul memo has generated buzz on business pages. But it has occasioned only a shrug from the caffeine cognoscenti in Seattle, which has more coffee shops per capita than any other major U.S. city.

For most Seattleites, what Schultz called "the watering down of the Starbucks experience" is stale news -- akin to reports that the Seattle SuperSonics (which Schultz sold last year) are a losing National Basketball Association team or that Seattle winters are wet.

"Like, duh, I have felt that way about Starbucks for 10 years," said Sean Seery, 36, an acupuncturist who sat one recent morning outside Victrola, a popular independent coffee shop on Seattle's Capitol Hill.

Inside the coffee shop, it was un-Starbucks business as usual:

A chrome-covered, vastly complicated, all-manual espresso machine yowled and hissed. The joint reeked of fresh roasted coffee. With spiky hair, great gobs of eye shadow and garrulous ways, two baristas ground beans for each new shot of espresso. Slowly and carefully, they created lattes in heavy china cups, each drink with its own distinctive floral pattern.

Around the store, customers hunched over laptops, sponging up free Wi-Fi, slowly nursing their espresso investments. A scarred, but serviceable, upright piano stood off in the corner. It is played, sometimes with virtuosity, by stragglers coming in off the street.

Alone at a small table sat James Bullock, 45, a software consultant who said he often spends much of his workday at Victrola. With almost no prompting, he said that he had been thinking off and on throughout the morning about Schultz and the dilution-through-growth of the Starbucks experience.

Starbucks was founded in Seattle, which remains home to its corporate headquarters, as well as to Schultz, whose wealth is estimated by Forbes at $1.1 billion.

"Starbucks does not define the coffee conversation anymore," Bullock said. "It is defined by independents like Victrola.

"Look at the baristas!" he continued, pointing to the intense women on the business side of the espresso machine. "This is a calling, what they do, like an old-school European barber. This is not pulling fries out of the vat when the thing beeps at you. With these old machines, you run the risk of variability in every cup. But sometimes you get art."

In the Feb. 14 memo to his executives, Schultz sounded as if he and Bullock had been hanging out together at Victrola:

"We achieved fresh roasted bagged coffee, but at what cost?" Schultz wrote. "The loss of aroma -- perhaps the most powerful non-verbal signal we had in our stores; the loss of our people scooping fresh coffee from the bins and grinding it fresh in front of the customer, and once again stripping the store of tradition and our heritage."

Heritage schmeritage.

That is the cold judgment of Deborah Esposito, who drinks her double-tall soy lattes with a half shot of vanilla at Fuel, another successful independent coffee shop in Seattle.

"Look, you can't run 13,000 shops like you can run a place like Fuel," said Esposito, 44, whose one-person software company, Mirror-doc, helps business owners customize Microsoft Word. "That is a choice Schultz made. How big do you want to be? How rich do you want to be?"

Schultz is not the founder of Starbucks but the visionary behind its expansion; he has said he wants to triple the footprint of the company, with more than 40,000 stores worldwide. In his recent memo, though, he does not explain how world domination in specialty coffee squares with getting "back to the core" of the soulful Seattle coffee shop.

Those soulful shops, by the way, continue to proliferate in Seattle -- and many prosper, even while surrounded on all sides by Starbucks.

One such newcomer in West Seattle is called Freshy's, which Amber Bennett, 31, opened a year and a half ago. It has a pinball machine, free Wi-Fi and lots of face time with Amber, who is blonde, attractive and works in the shop 12 hours a day, six days a week. She says that employees from nearby Starbucks regularly come over to Freshy's for coffee, which she makes on an old, all-manual Italian espresso machine.

"I have baristas from Starbucks coming here, looking for a job and saying they have 'coffee experience,' " Bennett said. "But at Starbucks, all they know how to do is push the buttons on the automatic machines."

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