How a Small Idea Become a Huge Business

Starbucks was founded by Howard Schultz in 1985 under the name Il Giornale Coffee Company and changed its name to Starbucks Corporation in 1987. The company is headquartered in Seattle, Washington. Starbucks operates and licenses more than 8,000 plus coffee shops both here domestically in the United States and internationally.

Company background

The inspiration for the Starbucks company was a Dutch immigrant, Alfred Peet, who had begun importing fine arabica coffees into the United States during the 1950s. Peet viewed coffee as a fine winemaker views grapes, appraising it in terms of country of origin, estates, and harvests. Peet had opened a small store, Peet's Coffee and Tea, in Berkeley, California, in 1966 and had cultivated a loyal clientele. Peet's store specialized in importing fine coffees and teas, dark-roasting its own beans the European way to bring out their full flavor, and teaching customers how to grind the beans and make freshly brewed coffee at home.

Howard Schultz strongly believed that Starbucks’ success was heavily dependent on customers having a very positive experience in its stores. This meant having store employees who were knowledgeable about the company’s products, who paid attention to detail, who eagerly communicated the company’s passion for coffee, and who had the skills and personality to deliver consistently pleasing customer service. Many of the baristas were in their 20s and worked part-time, going to college or pursuing other career activities on the side. The challenge to Starbucks, in Schultz’s view, was how to attract, motivate, and reward store employees in a manner that would make Starbucks a company that people would want to work for and that would result in higher levels of performance.