Howard Schultz says no more layoffs planned at Starbucks
Starbucks starts selling newest offering — instant coffee called Via — in Seattle and Chicago today.
Seattle Times business reporter
Starbucks debuts Via
Starbucks Chief Executive Howard Schultz says no more layoffs are coming at the coffee giant, and it will not continue to announce changes at the same fevered clip as it has during the past year.
"I don't think we'll see as many, no," Schultz said of the number of new products and innovations from the Seattle coffee company going forward.
Since resuming the CEO role early last year, Schultz has tried to fix the chain's slipping profits by cutting about 18,400 U.S. jobs, closing about 975 stores and making a dizzying array of menu and other changes.
The newest offerings come today, when Starbucks begins selling instant coffee for the first time and offering deals on "combination meals."
The instant coffee, called Via, will be sold only in Seattle and Chicago at first, followed by London later this month. Other U.S. stores will begin selling it in the fall.
At less than a dollar a serving, Via is intended for customers who want Starbucks coffee on the go — on airplanes, in hotels — and not as a substitute for the real thing brewed in stores and at home.
Starbucks breaks into the $17 billion instant-coffee market with Via, but Schultz expects it to reach people who don't drink instant coffee now.
"There's never been anything like this," he said. "If you are coming to Starbucks once a week or twice a week, you're going to want to take this with you."
Melody Biringer, whose tastes run toward soy lattes, can't see using it herself.
The founder of the Seattle company Crave, which creates parties, writes books and does consulting for women-owned businesses, tried the new instant coffee at a lunch Starbucks hosted for about 30 movers and shakers at the Boat Street Cafe last month.
"I was a little nervous to drink it," Biringer said. "But I added cream, and it tasted like a regular cup of coffee with my dessert."
She thinks it could become popular with people who prefer brewed coffee, and who don't live in Seattle.
"We have access to really good coffee on every block," Biringer said. "In other parts of the world, I think it will go really well."
To overcome coffee drinkers' skepticism about instant coffee, Starbucks is handing out samples and offering a three-pack of Via for $2.95. A dozen servings cost $9.95.
Nicole Miller Regan, an analyst who follows Starbucks for Piper Jaffray, loves the samples she got when Starbucks unveiled Via at a shindig in New York City last month.
This past weekend, she took Via to her cabin outside Minneapolis.
"I think it's fantastic; it tastes like a brewed cup of coffee," she said.
Among Starbucks' many moves of the past year, one of Regan's less favorite was buying the Ballard company that makes $11,000 Clover coffee machines.
"To me, it is a big capital investment at a time when they need be considering balance sheet a bit, but it's too early to measure the returns on that," she said.
The Clover sale was announced at Starbucks' annual shareholders meeting a year ago, when the company also unveiled new espresso machines, a new coffee brew and a new customer Web site and customer-loyalty program.
The innovations Starbucks is working on now will not be linked to its next shareholders meeting March 18, Schultz said.
He said he's spending a lot of time with customers lately, including holding "customer town halls" to hear what's on their minds.
One powerful conversation took place at a town hall in Tacoma last month, Schultz said, after one customer shared that he no longer reads or listens to the news because of how "dark and hopeless everything is," but he goes to Starbucks to "escape from the burden of the day."
The customer suggested Starbucks share "an authentic true story of something that happened locally in our community" each day, and the groundswell around his idea led another customer to tears.
Schultz did not reveal whether Starbucks would act on that idea, but said, "Starbucks has a role and a meaningful relationship with people that is not only about the coffee. We need to understand that better and do everything we can to preserve it."
Melissa Allison: 206-464-3312 or email@example.com
The information in this article, originally published at 12:00 a.m., March 3, 2009, was corrected at 5:47 p.m., March 3, 2009. Starbucks has cut about 18,400 jobs in the U.S. since early 2008. A previous version of this story incorrectly reported the number of jobs that were cut.