Few would deny that Howard Schultz is singularly responsible for what is best described as a coffee revolution.
As chairman and CEO of Starbucks, Schultz has taken his desire to create a company with soul and ridden the innovative waves through many highs and lows.
Schultz, who had ceased overseeing the company as CEO for eight years, was called back into service in 2008.
In Starbucks’ latest wave of innovation, he and his creative team have taken an old favorite, instant coffee, and repackaged it. And it has arrived with significant fanfare.
“We have worked for nearly 20 years to develop an instant coffee that offers customers the quality and taste they expect from fresh-brewed Starbucks coffee, and a unique and convenient way for them to enjoy it,” Schultz says. “This is a big move for us—the opportunity to reinvent a category, create new rituals, and grow our customer base is substantial.”
Since joining Starbucks in 1982 and buying it in 1987, Schultz has overseen and inspired numerous innovations, not the least of which was creating a warm atmosphere that customers want to visit time and again.
Serving the first latte in 1984 introduced many Americans to espresso beverages. In 1987, FlavorLock technology allowed Starbucks to ship freshly roasted coffee to customers far away, opening up international markets.
Then, in 1996, Starbucks moved popular beverages to grocery shelves around the world. Along the way music infused the Starbucks experience, and several noncoffee items were offered for sale.
It also can be argued that the chain created a whole new vocabulary for ordering coffee and gave customers an entire language by mastering the Starbucks menu. Tall nonfat latte, no foam, anyone?
In the foodservice industry, Starbucks distinguished itself by being one of the first companies to offer employees working at least 20 hours per week comprehensive health coverage and an employee stock-option plan.
Those moves contributed to one of the lowest turnover rates in the industry and also improved employee morale.
Through it all Starbucks continues to prosper. In the first quarter of fiscal 2010, ended December 27, 2009, Starbucks reported $2.7 billion in revenue, a 4 percent increase over the same quarter a year earlier. Store unit count now numbers more than 11,000.
Despite these many successes, Schultz continues to push his team of more than 142,000 partners forward.
“Starbucks is known around the world for not only serving great coffee, but for continually innovating and listening to our customers along the way,” says Dub Hay, Starbucks’ senior vice president of coffee and tea. “Pushing the limits of what others think will work is nothing new for Starbucks.
“We believe the market is ripe for this innovation—we will continue our journey of listening to consumer’s needs, and providing them with great-tasting solutions.”
Stan Sheetz may straddle the fence between convenience stores and foodservice, but when it comes to innovation, he is strictly out in front.
The CEO and president of the privately held Sheetz Inc. makes it his business to stay one step ahead of his one million customers each day.
“I think innovation should be driven by the customer and what they need,” Sheetz says. “Secondly, it should be driven by what we as a company need to efficiently serve the customer. That’s where the genesis of our technology has come from.”
Based in Altoona, Pennsylvania, Sheetz operates 368 stores in six states and maintains annual revenues north of $4.4 billion.
In 1994, Sheetz wondered if his technology vendor could develop touchscreen software that would allow the customer to select made-to-order menu items that were illustrated with pictures.
“Within a month we had a working prototype, and after we installed the first touchscreen our volume went up 12 percent immediately,” he says. Some of this bump in sales Sheetz attributes to customers who couldn’t read or write.
Sheetz also was one of the first retailers to offer pay-at-the-pump gas, an innovation that has been widely imitated. More recently, Sheetz launched a state-of-the-art, $46 million, 140,000-square-foot Sheetz Bros. Kitchen that delivers fresh, ready-to-eat products to all of the company’s stores.
“This really lets us control waste, and every store gets a delivery every single day of the year, including Christmas,” Sheetz says.
“From the standpoint of efficiency, this system allows us to automatically reorder those food products.” Consequently, Sheetz says, the company’s instock percentage is 99.97.
Another recent change is the introduction of frequent-buyer cards, which supply the company with the buying habits of their customers.
“These cards allow us to monitor what our customers are buying, and how frequently they purchase it. This then lets us send them coupons for the things we think they will be interested in,” Sheetz says.
“It allows for individual customer direct marketing.”
Also on the drawing boards for Sheetz is an app for the iPhone, which would tell a customer where the nearest Sheetz location is, as well as continuing tests on drive thrus.
It appears the search for new technologies to improve the customer experience at Sheetz is here to stay, and in all likelihood, so is innovation.