Coffee and Starbucks Essay

Starbucks began in 1971 when third academicsEnglish teacher Jerry Baldwin, history teacher Zev Siegel, and writer Gor weary Bowker open up a transshipment center called Starbucks hot chocolate, Tea, and Spice in the touristy Pikes arrange Market in Seattle. The three partners oerlap a love of finely drinking chocolate trees and exotic teas and believed they could build a clientele in Seattle much corresponding that which had already emerged in the San Francisco Bay area. each(prenominal) invested $1,350 and borrowed a nonher $5,000 from a bank to open the Pikes Place hive away.Baldwin, Siegel, and Bowker chose the account Starbucks in honor of Starbuck, the coffee-loving outset mate in Herman Melv na phthisisouses Moby Dick(so familiarity legend has it), and because they thought the come across evoked the romance of the high seas and the sea farawaying tradition of the early coffee handlers. The recent companys logo, designed by an artist friend, was a two-tailed mer maid encircled by the stores name. The inspiration for the Starbucks initiative was a Dutch immigrant, Alfred Peet, who had begun importing fine arabica coffees into the United States during the 1950s.Peet viewed coffee as a fine wine merchant views grapes, appraising it in terms of coun screen of origin, estates, and harvests. Peet had open a small store, Peets Coffee and Tea, in Berkeley, California, in 1966 and had cultivated a loyal clientele. Peets store specialized in importing fine coffees and teas, dark-roast its go across beans the European way to bring out their full flavor, and teaching customers how to grind the beans and extend to saucily brewed coffee at home.Baldwin, Siegel, and Bowker were well acquainted with Peets expertise, having visited his store on numerous occasions and exhausted many hours listening to Peet expound on quality coffees and the importance of proper bean-roasting techniques. All three were attached fans of Peet and his dark-roasted coffee s, going so far as to order their personal coffee supplies by mail from Peets. The Pikes Place store lineamentd modest, hand-built nautical fixtures. wiz wall was devoted to whole-bean coffees an early(a) had shelves of coffee products.The store did non advance fresh-brewed coffee by the cup, alone samples were sometimes available for sense of taste. Initially, Siegel was the only paid employee. He wore a grocers apron, scooped out beans for customers, extolled the virtues of fine, dark-roasted coffees, and functioned as the partnerships retail expert. The other two partners kept their sidereal day crinkles notwithstanding came by at lunch or after(prenominal) pass water to help out. During the start-up period, Baldwin kept the books and veritable a growing knowledge of coffee Bowker served as the magic, mystery, and romance man.1 The store was an immediate success, with sales exceeding expectations, partly because of a favorable article in the Seattle Times. In the ear ly months, each of the founders traveled to Berkeley to learn more than near coffee roasting from their mentor, Alfred Peet, who urged them to take place deepening their knowledge of coffees and teas. For most of the showtime year, Starbucks ordered its coffee beans from Peets, but then the partners purchased a used roaster from Holland and set up roasting trading operations in a nearby ramshackle construction.Baldwin and Bowker experimented with Alfred Peets roasting procedures and came up with their own blends and flavors. A second base Starbucks store was opened in 1972. By the early 1980s, the company had four Starbucks stores in the Seattle area and could lark of having been profitable every year since opening its doors. But the roles and responsibilities of the cofounders underwent change. Zev Siegel see burn markout and left the company to pursue other interests.Jerry Baldwin took over day-to-day trouble of the company and functioned as chief executive shoesr Gord on Bowker remained involved as an owner but devoted most of his time to his advertising and design firm, a weekly immaturefoundsprint he had founded, and a microbrewery he was launching (the Redhook Ale Brewery). Howard Schultz Enters the Picture In 1981, Howard Schultz, vice hot seat and general theater director of U. S. operations for Hammarplasta Swedish maker of stylish kitchen equipment and housewaresnoticed that Starbucks was placing larger orders than Macys was for a authentic type of drip coffeemaker.Curious to learn what was going on, he immovable to pay the company a visit. The dawn after his arrival in Seattle, Schultz was escorted to the Pikes Place store by Linda Grossman, the retail merchandising music director for Starbucks. A solo violinist was compete Mozart at the door, with his violin case open for donations. Schultz immediately was taken by the powerful and pleasing aroma of the coffees, the wall displaying coffee beans, and the rows of red, yellow, an d black Hammarplast coffeemakers on the shelves.As he talked with the clerk behind the prevent, the clerk scooped out some Sumatran coffee beans, ground them, put the causal agency in a cone filter, poured hot water over the cone, and shortly handed Schultz a porcelain muggins filled with the freshly brewed coffee. After three sips, Schultz was hooked. He began asking the clerk and Grossman questions almost the company, near coffees from varied parts of the world, and about the different ways of roasting coffee. Next, Schultz met with Jerry Baldwin and Gordon Bowker, whose offices overlooked the companys coffee-roasting operation.The gloriole was informal. Baldwin, spiffed up in a sweater and tie, showed Schultz some reinvigorated beans that had conscionable come in from Java and suggested they travail a sample. Baldwin did the brewing himself, using a glass pot called a French press. Bowker, a slender, bearded man with dark hair and intense cook eyes, appeared at the door and the three men sit down to talk about Starbucks. Schultz was struck by their knowledge of coffee, their commitment to providing high-quality products, and their passion for educating customers about the merits of dark-roasted coffees.Baldwin told Schultz, We dont manage the line of descent to maximize anything other than the quality of the coffee. 2 Starbucks purchased only the finest arabica coffees and put them finished a meticulous dark-roasting butt on to bring out their full flavors. Baldwin explained that the cheap robusta coffees used in supermarket blends burn when subjected to dark roasting. He also noted that the makers of supermarket blends prefer lighter roasts because they allow higher yields (the longer a coffee is roasted, the more weight it loses).Schultz was struck by the expect philosophy of the two partners. It was clear from their discussions that Starbucks stood not just for unsloped coffee, but rather for the dark-roasted flavor profiles that the founders were passionate about. Top-quality, fresh-roasted, whole-bean coffee was the companys differentiating feature and a bedrock value. It was also clear to Schultz that Starbucks was strongly committed to educating its customers to appreciate the qualities of fine coffees, rather than just kowtowing to mass-market appeal.The company depended mainly on word-of-mouth to get more people into its stores, then relied on the caliber of its product to give patrons a sense of discovery and excitement. It built customer loyalty cup by cup as buyers of its products developed their palates. On his trip back to New York the bordering day, Howard Schultz could not polish off thinking about Starbucks and what it would be like to be a part of the Starbucks enterprise. Schultz recalled, There was something magic about it, a passion and authenticity I had never experienced in business.3 Living in the Seattle area also had a strong appeal. By the time Schultz landed at Kennedy Airport, he k hot he wanted to go to work for Starbucks. Though there was nothing in his background ( fancy Exhibit 2) that watchful him for the experience, Schultz asked Baldwin at the prototypic opportunity whether there was any way he could fit into Starbucks. The two right away established an easy, comfortable rapport, but it still took a year of numerous meetings and a lot of win over to get Baldwin, Bowker, and their silent partner from San Francisco to agree to hire Howard Schultz.Schultz pursued a job at Starbucks far more vigorously than Starbucks pursued him. There was some nervousness at Starbucks about bringing in an outsider, especially a high-powered New Yorker, who had not grown up with the value of the company. Nonetheless, Schultz continued to press his ideas about the tremendous potential of expanding the Starbucks enterprise outside Seattle and exposing people all over America to Starbucks coffeearguing there had to be more than just a few thousand coffee lovers in Seattle who would like the companys products.Schultz believed that Starbucks had such groovy promise that he offered to take a stipend cut in exchange for a small equity stake in the business. But the owners disordered that by offering Schultz a job as head of selling they would be committing themselves to a new direction for Starbucks. At a jump off 1982 meeting with the three owners in San Francisco, Schultz once again presented his heap for opening Starbucks stores across the United States and Canada. He flew back to New York thinking a job offer was in the bag.But the next day Baldwin called Schultz and indicated that the owners had decided against hiring him because geographic expansion was too risky and because they did not grapple Schultzs vision for Starbucks. Schultz was despondent still, he believed so deeply in Starbucks potential that he decided to make a last-ditch appeal. He called Baldwin back the next day and made an impassioned, though reasoned, case for why the deci sion was a mistake. Baldwin agreed to reconsider.The next morning Baldwin called Schultz and told him the job of heading marketing and overseeing the retail stores was his. In September 1982, Howard Schultz took on his new responsibilities at Starbucks. Starbucks and Howard Schultz The 198285 Period In his counterbalance few months at Starbucks, Schultz worn-out(a) most of his waking hours in the four Seattle storesworking behind the counters, tasting different kinds of coffee, talking with customers, getting to know store personnel, and educating himself about the retail aspects of the coffee business.By celestial latitude, Jerry Baldwin decided that Schultz was ready for the final part of his trainingroasting coffee. Schultz spent a week at the roaster examining the distort of the beans, listening for the telltale second pop of the beans during the roasting process, learning to taste the subtle differences among Baldwin and Bowkers variant roasts, and familiarizing himself wit h the roasting techniques for different beans. Meanwhile, he made a point of acclimating himself to the informal dress code, blending in with the culture, and gaining credibility and building trust with colleagues.Making the transition from the high-energy, coat-and-tie style of New York to the more quotidian ambience of the Pacific Northwest required a conscious effort on Schultzs part. One day during the busy Christmas season that first year, Schultz made real headway in gaining the acceptance and admire of company personnel at the Pikes Place store. The store was packed and Schultz was behind the counter ringing up sales when someone shouted that a customer had just headed out the door with some stymietwo expensive coffeemakers it turned out, one in each hand.Without thinking, Schultz leaped over the counter and chased the bandit up the cobblestone street outside the store, yelling Drop that stuff Drop it The thief was galvanize enough to drop both pieces and run away. Schu ltz picked up the merchandise and returned to the store, holding up the coffeemakers like trophies. Everyone applauded. When Schultz returned to his office later that afternoon, his staff had strung up a banner that read Make my day. 4 Schultz was teeming with ideas for the company.Early on, he noticed that first-time customers sometimes felt uneasy in the stores because of their lack of knowledge about fine coffees and because store employees sometimes came across as a little arrogant. Schultz worked with store employees on growth customer-friendly sales skills and produced brochures that made it easy for customers to learn about fine coffees. Schultzs biggest idea for Starbucks future came during the spring of 1983 when the company sent him to Milan, Italy, to attend an international housewares show.While walking from his hotel to the convention center, Schultz spotted an espresso close off and went inner to look around. The cashier beside the door nodded and smiled. The baris ta (counter worker) greeted Howard cheerfully, then gracefully pulled a shot of espresso for one customer and handcrafted a foamy cappuccino for another, all the while conversing merrily with those standing at the counter. Schultz judged the baristas performance as great theater. Just down the way on a side street, he entered an even more dis arrange espresso bar, where the barista, whom he surmised to be the owner, was greeting customers by name people were laughing and talking in an atmosphere that plainly was comfortable and familiar. In the next few blocks, he saw two more espresso bars. When the trade show concluded for the day, Schultz walked the streets of Milan exploring espresso bars. Some were stylish and upscale others attracted a blue-collar clientele. What struck Schultz was how popular and vivacious the Italian coffee bars were.Most had few chairs, and it was common for Italian opera to be playing in the background. Energy levels were typically high, and the bars se emed to function as an integral community gathering place. Each one had its own unique character, but they all had a barista who performed with flair and exhibited a camaraderie with the customers. Schultz was oddly struck by the fact that there were 1, calciferol coffee bars in Milan, a city about the size of Philadelphia, and a total of 200,000 in all of Italy.His mind started churning. Schultzs first few eld in Milan produced a revelation The Starbucks stores in Seattle comp permitely missed the point. Starbucks, he decided, considered to serve fresh-brewed coffee, espresso, and cappuccino in its stores (in addition to beans and coffee equipment). Going to Starbucks should be an experience, a special treat the stores should be a place to meet friends and visit. Re-creating the Italian coffee-bar culture in the United States could be Starbucks differentiating factor.Schultz remained in Milan for a week, exploring coffee bars and learning as much as he could about the Italian pa ssion for coffee drinks. In one bar, he heard a customer order a caffe latte and decided to try one himselfthe barista made a shot of espresso, steamed a frothy pitcher of milk, poured the two together in a cup, and put a dollop of foam on the top. Schultz concluded that it was the perfect drink, and thought to himself, No one in America knows about this. Ive got to take it back with me. 5 Schultzs festering FrustrationOn Schultzs return from Italy, he shared his revelation and ideas for modifying the data formatting of Starbucks stores with Baldwin and Bowker. But sooner of winning their approval, Schultz encountered strong resistance. Baldwin and Bowker argued that Starbucks was a retailer, not a restaurant or bar. They feared that serving drinks would put them in the beverage business and dilute the integrity of Starbucks mission as a coffee store. They pointed out that Starbucks was a profitable small, private company and there was no reason to rock the boat.But a more pressi ng reason for their resistance emerged shortlyBaldwin and Bowker were excited by an opportunity to purchase Peets Coffee and Tea. The acquisition took place in 1984 to fund it, Starbucks had to take on considerable debt, leaving little in the way of financial flexibility to support Schultzs ideas for get into the beverage part of the coffee business or expanding the number of Starbucks stores. For most of 1984, Starbucks managers were dividing their time among their operations in Seattle and the Peets enterprise in San Francisco.Schultz found himself in San Francisco every other week supervising the marketing and operations of the quintuplet Peets stores. Starbucks employees began to feel neglected and, in one quarter, did not receive their usual bonus due to tense financial conditions. Employee discontent escalated to the point where a union election was called, and the union won by three votes. Baldwin was shocked at the results, concluding that employees no longer trusted him .In the months that followed, he began to spend more of his energy on the Peets operation in San Francisco. It took Howard Schultz nearly a year to convince Jerry Baldwin to let him test an espresso bar. After Baldwin relented, Starbucks sixth store, which opened in April 1984, became the first one designed to sell beverages and the first one in downtown Seattle. Schultz asked for a 1,500-square-foot space to set up a full-scale Italian-style espresso bar, but Jerry agreed to allocating only 300 square feet in a corner of the new store.There was no pre-opening marketing blitz and no sign announcing Now Serving Espressothe lack of fanfare was part of a deliberate experiment to see what would happen. By closing time on the first day, some four hundred customers had been served, well above the 250-customer average of Starbucks best-performing stores. at heart two months the store was serving 800 customers per day. The two baristas could not keep up with orders during the early mornin g hours, resulting in lines outside the door onto the sidewalk.Most of the business was at the espresso counter sales at the regular retail counter were only adequate. Schultz was elated by the test results his visits to the store indicated that it was becoming a gathering place and that customers were pleased with the beverages being served. Schultz expected that Baldwins doubts about entering the beverage side of the business would be dispelled and that he would gain approval to take Starbucks to a new level. Every day he went into Baldwins office to show him the sales figures and customer counts at the new downtown store.But Baldwin was not comfortable with the success of the new store he believed that espresso drinks were a embarrassment from the core business of selling fine arabica coffees at retail and rebelled at the thought that people would see Starbucks as a place to get a quick cup of coffee to go. He adamantly told Schultz, Were coffee roasters. I dont want to be in th e restaurant business . . . Besides, were too deeply in debt to consider pursuing this idea. 6 While he didnt deny that the experiment was succeeding, he didnt want to go forward with introducing beverages in other Starbucks stores.Schultzs efforts to persuade Baldwin to change his mind continued to meet strong resistance, although to avoid a total blind alley Baldwin finally did agree to let Schultz put espresso machines in the back of two other Starbucks stores. Over the next several months, Schultzat the age of 33made up his mind to leave Starbucks and start his own company. His plan was to open espresso bars in high-traffic downtown locations that would emulate the friendly, energetic atmosphere he had encountered in Italian espresso bars.Schultz had become friends with a corporate lawyer, Scott Greenberg, who helped companies raise venture capital and go general. Greenberg told Schultz he believed investors would be interested in providing venture capital for the kind of comp any Schultz had in mind. Baldwin and Bowker, knowing how frustrated Schultz had become, back up his efforts to go out on his own and agreed to let him stay in his current job and office until definitive plans were in place. Schultz left Starbucks in late 1985. Schultzs Il Giornale VentureIronically, as Schultz was finalizing the documents for his new company, Jerry Baldwin announced he would invest $150,000 of Starbucks money in Schultzs coffee-bar enterprise, thus becoming Schultzs first investor. Baldwin original Schultzs invitation to be a director of the new company, and Gordon Bowker agreed to be a part-time consultant for six months. Bowker urged Schultz to make sure that everything about the new storesthe name, the presentation, the care taken in preparing the coffeewas calculated to lead customers to expect something better than competitors offered.Bowker proposed that the new company be named Il Giornale (pronounced ill jor-nahl-ee ) Coffee Company, a suggestion that Schu ltz accepted. In December 1985, Bowker and Schultz made a trip to Italy during which they visited some 500 espresso bars in Milan and Verona, observing local habits, taking notes about decor and menus, snapping photographs, and videotaping baristas in action. Greenberg and Schultz then move up plans to raise an initial $400,000 in seed capital and another $1. 25 trillion in equityenough to launch at least eight espresso bars and prove the concept would work in Seattle and elsewhere.The seed capital was raised by the end of January 1986, primarily from Starbucks and two other investors who believed in Schultz and his ideas, but it took Schultz until the end of the year to raise the remaining $1. 25 million. He made presentations to 242 potential investors, 217 of whom state no. Many who heard Schultzs hour-long presentation saw coffee as a commodity business and thought that Schultzs espresso-bar concept lacked any basis for sustainable competitive advantage (no unembellished on dark roast, no advantage in purchasing coffee beans, no way to bar the portal of imitative competitors).Some noted that consumption of coffee had been declining since the mid-1960s, others were skeptical that people would pay $1. 50 or more for a cup of coffee, and still others were turned off by the companys tricky-to-pronounce name. Being rejected by so many potential investors was disheartening (some who listened to Schultzs presentation ? didnt even bother to call him back others refused to take his calls). Nonetheless, Schultz continued to display passion and enthusiasm in making his pitch and never doubted that his plan would work. He ended up raising $1.65 million from about 30 investors most of this money came from nine people, fiver of whom became directors of the new company. One of Howard Schultzs earliest moves during the start-up process was to hire Dave Olsen, who in 1974 had opened a coffee bar, Cafe Allegro, near the busiest admission to the University of capita l of the United States campus. Olsen was a long-standing Starbucks customer, having discovered the quality of Starbucks coffee beans, gotten to know the owners, and worked with them to develop a custom espresso roast for use in his cafe.Olsens successful Cafe Allegro had become known for cafe au lait, a concoction equivalent to the Italian caffe latte. When Olsen heard of Schultzs plans for Il Giornale, he called Schultz and expressed an interest in being part of the new companyhe was intrigued by the Italian coffee-bar concept and was looking for a more expansive career opportunity. Olsen not only had coffee expertise but also had spent 10 years in an apron behind the counter at Cafe Allegro. Schultz immediately picked up on the synergy among him and Olsen.His own strengths were in forming and communicating a vision, raising money, finding good store locations, building a brand name, and planning for growth. Olsen understood the nuts and bolts of operating a retail cafe, hiring an d training baristas, and making and serving good drinks. Plus, Olsen was fun to work with. Schultz put Olsen in charge of store operations, made him the coffee conscience of the company, and gave him the authority to make sure that Il Giornale served the best coffee and espresso possible. The first Il Giornale store opened in April 1986.It had a mere 700 square feet and was located near the entrance of Seattles tallest building. The decor was Italian, the menu contained Italian words, and Italian opera music played in the background. The baristas wore unclouded shirts and bow ties. All service was stand-upthere were no chairs. National and international papers hung from rods on the wall. By closing time on the first day, 300 customers had been served, mostly in the morning hours. Schultz and Olsen worked hard to make sure that all the details were executed perfectly.For the first few weeks, Olsen worked behind the counter during the morning rush. But while the core idea worked well , it soon became apparent that several aspects of Il Giornales format werent appropriate for Seattle. Some customers objected to the incessant opera music, others wanted a place to sit down, and many didnt understand the Italian words on the menu. These mistakes were quickly fixed, without compromising the style and elegance of the store. Within six months, Il Giornale was serving more than 1,000 customers a day and regulars had learned how to pronounce the companys name.Because most customers were in a hurry, it became apparent that speedy service was a competitive advantage. Six months after opening the first store, Il Giornale opened a second store in another downtown building. A third store was opened in Vancouver, British Columbia, in April 1987. Vancouver was chosen to test the transferability of the companys business concept outside Seattle. To reach his goal of opening 50 stores in five years, Schultz needed to dispel his investors doubts about geographic expansion. By mid-1 987 sales at the three stores were equal to $1.5 million annually. Il Giornale Acquires Starbucks In March 1987 Jerry Baldwin and Gordon Bowker decided to sell the whole Starbucks operation in Seattlethe stores, the roasting plant, and the Starbucks name. Bowker wanted to cash out his coffee-business investment to concentrate on his other enterprises Baldwin, who was tired of commuting between Seattle and San Francisco and wrestling with the troubles created by the two parts of the company, elected to concentrate on the Peets operation. As he recalls, My wife and I had a 30-second conversation and decided to keep Peets.It was the original and it was better. 7 Schultz knew immediately that he had to buy Starbucks his board of directors agreed. Schultz and his newly hired finance and accounting manager drew up a set of financial projections for the unite operations and a financing package that included a stock offering to Il Giornales original investors and a line of credit with local banks. While a rival plan to acquire Starbucks was put together by another Il Giornale investor, Schultzs final cause prevailed and within weeks Schultz had raised the $3.8 million needed to buy Starbucks. The acquisition was completed in venerable 1987. After the papers were signed, Schultz and Scott Greenberg walked across the street to the first Il Giornale store, ordered themselves espresso drinks, and sat at a table near the window. Greenberg placed the hundred-page business plan that had been used to raise the $3. 8 million between them and lifted his cup in a toastWe did it, they said together. 8 The new name of the combined companies was Starbucks Starbucks as a Private Company 198792.The following Monday morning, Schultz returned to the Starbucks offices at the roasting plant, greeted all the familiar faces and accepted their congratulations, then called the staff together for a meeting on the roasting-plant floor. He began All my life I have wanted to be part of a compa ny and a group of people who share a common vision . . . Im here today because I love this company. I love what it represents . . . I know youre concerned . . . I promise you I will not let you down. I promise you I will not leave anyone behind . . . In five years, I want you to look back at this day and say I was there when it started.I helped build this company into something great. 9 Schultz told the group that his vision was for Starbucks to become a national company with values and guiding principles that employees could be proud of. He indicated that he wanted to include people in the decision-making process and that he would be open and honest with them. Schultz said he believed it was essential, not just an intriguing option, for a company to respect its people, to inspire them, and to share the fruits of its success with those who contributed to its long-term value.His aspiration was for Starbucks to become the most see brand name in coffee and for the company to be admire d for its corporate responsibility. In the next few days and weeks, however, Schultz came to see that the unity and morale at Starbucks had deteriorated badly in the 20 months he had been at Il Giornale. Some employees were cynical and felt unappreciated. There was a feeling that prior management had abandoned them and a wariness about what the new regime would bring. Schultz determined that he would have to make it a priority to build a new relationship of mutual respect between employees and management.The new Starbucks had a total of nine stores. The business plan Schultz had presented investors called for the new company to open 125 stores in the next five years15 the first year, 20 the second, 25 the third, 30 the fourth, and 35 the fifth. Revenues were project to reach $60 million in 1992. But the company lacked experienced management. Schultz had never led a growth effort of such magnitude and was just learning what the job of CEO was all about, having been the president of a small company for barely two years. Dave Olsen had run a single cafe for 11 years and was just learning to manage a multistore operation.Ron Lawrence, the companys ascendancy, had worked as a controller for several organizations. Other Starbucks employees had only the experience of managing or being a part of a six-store organization. When Starbucks rouge roaster and coffee buyer resigned, Schultz put Dave Olsen in charge of buying and roasting coffee. Lawrence Maltz, who had 20 years of experience in business and eight years of experience as president of a profitable public beverage company, was hired as executive vice president and charged with heading operations, finance, and human resources. In the next several months, a number of changes were instituted.To symbolize the merging of the two companies and the two cultures, a new logo was created that melded the Starbucks and Il Giornale logos. The Starbucks stores were equipped with espresso machines and remodeled to look more Italian than Old World nautical. The traditional Starbucks brown was replaced by Il Giornale green. The result was a new type of storea cross between a retail coffee-bean store and an espresso bar/cafethat became Starbucks signature format in the 1990s. By December 1987, employees at Starbucks had begun buying into the changes Schultz was making and trust had begun to build between management and employees.New stores were on the enclosure of opening in Vancouver and boodle. One Starbucks store employee, Daryl Moore, who had voted against unionization in 1985, began to question his fellow employees about the need for a union. Over the next few weeks, Moore began a move to decertify the union. He carried a decertification letter around to Starbucks stores and secured the signatures of employees who no longer wished to be represented by the union. After getting a mass of store employees to sign the letter, he presented it to the National Labor Relations Board and the union represent ing store employees was decertified.Later, in 1992, the union representing Starbucks roasting plant and warehouse employees was also decertified. Expansion into Markets Outside the Pacific Northwest Starbucks entry into Chicago proved far more troublesome than management anticipated. The first Chicago store opened October 27, 1987, the same day the stock market crashed. Three more stores were opened in Chicago over the next six months, but customer counts were substantially below expectationsChicagoans didnt take to dark-roasted coffee as fast as Schultz had anticipated.At the first downtown store, for example, which opened onto the street rather than into the lobby of the building where it was located, customers were hesitant to go out in the wind and cold to get a cup of coffee in the winter months. Store margins were squeezed for a number of reasons It was expensive to supply fresh coffee to the Chicago stores out of the Seattle warehouse, and both rents and wage rates were highe r in Chicago than in Seattle. Gradually, customer counts improved, but Starbucks lost money on its Chicago stores until 1990, when prices were raised to reflect higher rents and labor costs, more experienced store manag.