Howard Schultz’s Coffee Comeback

In 2008, Starbucks was closing hundreds of stores, its stock had fallen nearly 50 percent, and critics said the brand had lost its soul. Founder-turned-CEO Howard Schultz returned to the top job and made a radical move: he closed every U.S. Starbucks store for a single afternoon to retrain baristas on how to make the perfect espresso. “This is about more than coffee it’s about rekindling the romance,” he told employees. Fifteen years later, Starbucks is worth more than $100 billion, proof that Schultz’s obsession with culture and experience created one of the world’s most iconic brands.

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Origin Moment: Discovering the Coffeehouse

Born in 1953 in Brooklyn to a working-class family, Schultz was the first in his family to attend college. After graduating, he began his career in sales at Xerox, where he honed his business instincts. In 1982, he joined a small Seattle coffee company called Starbucks, a move that would change both his life and the global coffee industry.

On a trip to Milan, Schultz fell in love with Italy’s espresso bars and the sense of community they fostered. Convinced Starbucks should sell more than beans and equipment, he pitched the idea of cafés where people could gather. When the founders resisted, Schultz started his own chain, Il Giornale, before acquiring Starbucks in 1987.

First Turning Point: From Beans to Cafés (1980s–1990s)

Under Schultz, Starbucks expanded from 11 stores in Seattle to over 2,000 by 1999. The company’s vision was to create a “third place” between home and work, where customers could relax, connect, and enjoy premium coffee.

Schultz emphasized training, benefits for part-time workers, and stock options for baristas an unheard-of perk in the service industry. This built loyalty among employees and differentiated Starbucks from fast-food rivals.

Why it mattered: Starbucks wasn’t just selling coffee it was selling an experience that scaled globally.

Cultural Reset: The 2008 Return

By 2007, rapid expansion had diluted the brand. Stores were overcrowded with merchandise, espresso machines blocked baristas from view, and customer satisfaction was falling. The financial crisis hit, and Starbucks announced plans to close 600 stores.

Schultz returned as CEO and immediately refocused on quality. He shut down stores for retraining, removed non-core products, and brought back the aroma and theater of coffee-making. “We lost sight of our coffee,” he admitted. Within two years, Starbucks returned to profitability and began a steady climb.

Second Turning Point: Digital & Global Growth (2022)

In 2022, Schultz returned again as interim CEO amid labor unrest and slowing growth. He doubled down on Starbucks’ digital strategy, expanding its rewards app, which now accounts for more than 50 percent of U.S. sales.

He also accelerated expansion in China, now Starbucks’ fastest-growing market, and invested in sustainability initiatives to future-proof the supply chain. Though Schultz handed the reins to Laxman Narasimhan in 2023, his fingerprints remain on the company’s renewed global vision.

Key insight: Staying relevant means constantly reinventing both the customer experience and the infrastructure behind it.

Mindset & Habits: Five Practices You Can Steal

Lessons for Readers

1. Experience is the Product

Starbucks succeeded because Schultz sold more than coffee he sold a sense of belonging. Elevating the experience above the transaction builds enduring loyalty. Consistently investing in the customer journey creates defensibility.

2. Invest in People Early

Offering benefits to part-time baristas signaled respect and built a motivated workforce. Treating employees as partners pays dividends in service quality. People-first policies become a long-term competitive advantage.

3. Face Reality, Fast

Closing stores and retraining baristas in 2008 was bold but necessary. Leaders who confront problems directly inspire confidence. Taking visible action shows teams that change is more than words.

4. Use Digital to Deepen Relationships

The Starbucks Rewards app transformed convenience into loyalty. Technology can enhance not replace human connection. Tools that reward engagement reinforce habits and brand affinity.

5. Reinvent Without Losing the Core

From Milan cafés to Chinese megacities, Schultz adapted Starbucks without abandoning its essence. Reinvention keeps a brand alive, but values keep it authentic. Balancing change with core identity creates sustainable growth.

Weekly Challenge

Visit your own “stores” whether physical sites, teams, or customer touchpoints and observe them firsthand. Identify one aspect that has drifted away from its original purpose or standard. Create an immediate plan to restore its quality and communicate why it matters.