Brewing a Turnaround, Part Two by Jeff Matas

I'm a huge Starbucks junkie, yet I'll confess in 2008, I thought the glory days of the company were over for good. The economic recession was in full swing. Wall Street was in free-fall. The housing bubble burst and left homeowners with something called "negative equity" meaning they owed more on their mortgage than their homes where worth. Unemployment was rising. People were writing Starbucks' obituary and the epitaph went like this, "Who would ever pay four dollars for a cup of coffee?" Competitors sensing Starbucks vulnerability began to attack. McDonalds ran a nationwide advertising campaign saying, "five dollars for coffee is stupid". Sales were falling and Starbucks stock was plummeting.

In March 2008, Starbucks CEO Howard Schultz gathered his top executives together. He told the story of how the Beatles played in Shea Stadium in the summer of 1965 to 55,000 hysterical screaming fans. The noise was so loud; they couldn't hear their own music. Looking back on that day, Paul McCartney said the massive success of the band-as evidenced in Shea Stadium-was the beginning of the end of the Beatles. Howard Schultz paused and looked at his executive team and asked, "When did we stop hearing our own music? When did we forget that our business is about the customer and our love and passion for the coffee?"

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