Business
Howard Schultz and the Starbucks Third Place Strategy
Howard Schultz built Starbucks around a room people wanted to stay in. Seventy percent of orders now skip that room. What changed, and what it means for service firms.
In 1983, Howard Schultz went to Milan on a buying trip for Starbucks and came home convinced the company should sell coffee by the cup. Starbucks then sold whole beans, loose tea and spices from a few Seattle shops. Schultz was 29 and had joined the year before as director of retail operations and marketing. In Italy he saw espresso bars that gave people a reason to stay somewhere. Over the next fifteen years that idea, later called the "third place" between home and work, turned Starbucks into a chain where people sat for hours in plush purple armchairs.
