Host: Now the Chief Executive of Starbucks, Howard Schultz, is in the UK and he joins us now. Good morning.
Howard: Good morning. Great to be here!
Host: Well, it's an extraordinary performance to have tripled your profits over that period. How has that happened?
Howard: Well, clearly we were facing the 1)cataclysmic financial crisis, like almost every other company over last 18 months. And during that time, as you mentioned, we did have a fair amount of cost 2)containment, but the big story is the customers have returned to the company both in the U.S. and here in the UK.
Host: So that during the crisis the business fell off 3)substantially and now you're rebuilding back to those previous levels.
Howard: Yeah, and headline for us is, especially in the UK, we've had ten 4)consecutive months of year-over-year increase in customer traffic, which really demonstrates the power of the brand and that the…the improvement in the 5)health of the UK consumer.
Host: You talk (talked) 6)euphemistically about cost containment, and it was your phrase, which in plain English is cutting jobs and closing stores.
Howard: Well, for the first time in our forty-year history we did have some 7)layoffs in our company in the U.S.. That's true.
Host: Yeah, and has that process stopped now that the profits …
Host: …has (have) started to increase so substantially?
Howard: Not only has it stopped, but we're starting to open up stores again in the U.S. and abroad, and certainly here in the UK over the next 12 months, and began hiring again. So we're cautiously optimistic about the near- and long-term and think the worst is over.
Host: The insurance industry developed from coffee houses back in the 18th century. Coffee houses have played in history a very very strong social role in the development of lots of different things and so far brands like yours and Costa Coffee and Café Nero and the like have created I suppose a remarkable revolution in that you've got us to pay extraordinary amounts of money …
Host: …for what is just a hot drink. Has it done anything else apart from that?
Howard: Well, I think it's more than a hot drink, but nevertheless I'd say that I think what we've created, not unlike in years past with the English Pub, [sic] kind of a third place between home and work and this deep sense of community. So, in addition to the great coffee that Starbucks sells, we are creating an environment for people to socialize and, since coffee's such a romantic 8)beverage, it brings people together.
Host: You went to work for it, but you actually were fundamental in changing what it did, because prior to you, it basic…it didn't sell cups of coffee, it just sold coffee beans: coffee was something you bought and made at home. I mean it's not …
Host: …exaggerating to say you revolutionized that.
Howard: Well, I took my first trip to Italy in '83 and saw the Italian coffee bar and that was the 9)catalyst, the 10)genesis for me thinking that there was an opportunity to transform the business. And we introduced café latté to America in 1985 and kinda 11)the rest is history.
Host: Right. And that was the first time that that sort of coffee was…was drunk in the States; it was started…
Host: … by Starbucks
Host: Tell how you got the name Starbucks, 'cause I hear lots of different stories. One is that it was named after Captain Ahab's first 12)mate in the novel 13)Moby Dick, but I've also seen on the internet that, 14)bizarrely, it's named after a mining camp called Starbo …