14 Jun 2012 The revival of Starbucks in the midst of a recession

Starbucks has now regained its footing after suffering a miserable few years.

One explanation is that it achieved this resurgence by rediscovering its roots – good coffee, served expertly, and with an emphasis on what Starbucks employees rhapsodize as the “human connection.”

But the company’s rebound is more complicated, and arguably more interesting, than that. Much of Starbucks’s financial rebound (in 2011, $1.7 billion in income on $11.7 billion in revenue) actually results from domestic cost-cutting – closing underperforming branches and wrenching savings from improvements in efficiency and supply-chain distribution. At the same time, the company has been steadily expanding around the globe, especially in China.

Meanwhile, much of Starbucks’s reputational rebound is the result of Schultz and his company’s efforts to renew a culture of entrepreneurialism and innovation that had fallen by the wayside during a mad rush for growth a few years back.

Some of these efforts have taken the form of new products – Blonde lighter roast, or Via instant coffee, which in 2011 reached annual sales of $250 million. Others take the form of community involvement, such as Starbucks’s Jobs for USA program, a recent endeavour to use wristbands as a way of raising funds for job-creation initiatives in economically hard-hit communities.

“I’ve always said there’s not a silver bullet or one single thing that creates a solution,” says Schultz tells me during a candid conversation one afternoon in his Seattle office.

Starbucks is something of a corporate paradox. The company is a multinational giant and growing, especially through branches overseas and new packaged goods in the grocery aisle. At the same time, it is able to introduce risky ideas quickly, systematically, and sometimes idiosyncratically, much like a startup- even though it has more than 17 000 branches and nearly 200 000 employees. How?

Schultz has come to believe that size is not a limiting factor. In terms of being innovative, he says, “I think scale can be an advantage. It’s not about being big. It’s about behaviour.”…..

Fast Company: Read the full article here

The Nine Other [Very American] Contenders:

Chipotle

For making fast-casual dining sustainable and marketing it like no other fast food, to the tune of $1.84 billion last year. The burrito hub increased its use of local produce in 2011 to more than 10 million pounds, double its 2010 goal. Read More

Chobani

For becoming America’s leading Greek yogurt brand in only four years. With a focus on quality, hormone-free ingredients, and exotic flavors like blood orange, Chobani sounds like it was made for the aisles of Dean & Deluca. But with an average unit price of $1.40, it retails for 30% less than competitor Fage. Oh, and no need to look further than Walmart for a cup. Read More

GrubHub

For leading the way in mobile food delivery apps. Last October, GrubHub acquired competitor Dotmenu, giving it a total of more than $225 million in combined order revenues to restaurants, not including chains like McDonald’s. Since its creation in 2004, the online food delivery service has expanded from the web onto smartphones, with expectations of becoming almost entirely mobile by 2016.

Revolution Foods

For boosting the health profile and quality of school lunches. Launched in 2006 in the Bay Area, the food service has since spread to eight states and Washington DC. Partnering with Whole Foods, Revolution now delivers unprocessed, balanced meals–free of hormones, high-fructose corn syrup, and artificial flavorings–to 600 schools, nearly twice as many as two years ago, and projects $50 million in revenue for 2011-2012

Sysco

For restructuring its produce delivery system to better serve locavores. It took three years of strategizing, but the bulk food provider now allows clients to integrate locally grown produce into their shipments via consultations with food brokers. In Michigan, where Sysco began testing, the company moved 100,000 cases of local produce in 2010, nearly twice the amount of 2008.

Naked Pizza

For proving healthy pizza can be palatable (and profitable). Premised on ancient dietary patterns, Naked Pizza contains a whole-grain crust chock-full of probiotics, as well as hormone- and additive-free toppings. Since opening its first restaurant two years ago, Naked has expanded to 26 locations (with 500 in development) – in large part thanks to its social media blitz. “We look at social media as a way to let people know what we’re doing, and ask them if it’s valid for us to be inside the community,” says cofounder Robbie Vitrano. “If we’re invited, so to speak.”

Ness Computing

For crafting a sleek, social food app that recommends what to eat next. Since its launch in August, Ness (short for Likeness) added more than 100,000 users and generated more than 1.5 million ratings in just a few months, a feat that took Yelp three years. Ness provides recommendations via “radical personalization” but also integrates with a user’s social media – Foursquare check-ins, Facebook friends’ ratings – in an unprecedented way. CEO Corey Reese has plans for taking Ness beyond food recs: “We want to build a digital replication of a person’s preferences. We eventually want to be able to make nightlife, concerts, movie recommendations.”

Stop & Shop

For streamlining the checkout process with an easy-to-use mobile payment app. First introduced last June, the Scan It! app allows smartphone users to scan, tally, and pay for groceries on their phones, making this New England supermarket the first with a fully integrated in-store payment system.

Tequila Avión

For becoming the fastest-growing spirits brand, with a little help from its Entourage. The ultrapremium tequila startup – itself a rarity in the conglomerate-driven liquor business – has won national distribution in record time thanks to an obsessive attention to what’s in the bottle as well as deft deals and showmanship to get the word out.