When Howard Schultz returned to Starbucks in 2008, he had to face what had gotten the coffee shop giant into trouble. Schultz told Fortune magazine that he thought the brand had become the "posterchild for excess." The company was facing increased competition from brands such as McDonald's, and its high-growth strategy meant more than $600 million had to be shaved off from operating expenses.
From the story:
He started the Starbucks turnaround with what for many companies is the hardest thing to do: confessing its sins. Schultz had to tell his employees that the company had made mistakes and would pay the price by taking $600 million in costs out of the business. Part of that would come from laying off employees and shutting down 600 stores. 80% of them had been open for less than two years.
Despite the challenges, Schultz said he refused to drop health care for his employees, a line item that tallies $300 million and is more than what the company spends on coffee.
