Is Starbucks just a coffee shop – or is it becoming a cult?
THERE was not an empty seat in the house as pop superstar Alicia Keys, dressed in a halterneck black jumpsuit with a plunging diamante neckline, took to the piano and belted out her hit song No One.
Her ballad We are Here, a plea for peace and social justice, was rapturously received and the singer bowed out to a standing ovation.
Earlier, the audience at this gig – so large that surplus numbers visiting the McCaw Hall in Seattle had to be accommodated in overflow tents equipped with video links – had already been treated to a dazzling display of music and dance by a troupe of Chinese performers.
Despite appearances, this was not a musical extravaganza. It was the annual shareholder meeting for Starbucks, which in its hometown of Seattle is not merely a coffee company, but something akin to a cult.
As anyone who has ever attended an investor meeting in Britain will know, these are usually dismal occasions, attended mainly by pensioners who turn up in the hope of a few free Custard Creams and curly-crusted sandwiches.
The Starbucks’ shindig, by contrast, is a cross between a rock concert and an evangelical meeting. It is also highly politicised.
After running through profit numbers and growth plans, the lights dim, a plaintive soundtrack pipes up, and the words ‘Have we lost our way, America?’ flash across a giant screen. They are followed by images of conflict, homeless people, border controls and US presidential hopeful Donald Trump.
FOUNDER Howard Shultz (pictured inset), steps onto the stage and launches into an impassioned oration.
‘I have struggled for weeks to find the right words to express the pain I feel in my heart about where America is headed and the cloud hanging over the American people,’ he told his rapt listeners. The US, he said, is facing a ‘test, not only of our character but our morality as a people’.
The coffee tycoon, who had a modest upbringing in Brooklyn, declared himself a living proof of the American Dream that anyone with hard work and ambition can make it to the top.
But Schultz said he feared the dream is dying. ‘Sadly, our reservoir is running dry, depleted by cynicism, despair, division, exclusion, fear and indifference,’ he said.
Continuing in the same vein, he urged investors to act: ‘not with cynicism, but with optimism. not with despair, but with possibility. not with division, but with unity. not with exclusion, but with inclusion. not with fear, but with compassion. not with indifference, but with love.’
Safe to say, if the chief executive of a British company behaved like this, shareholders would think they had lost their marbles.
The 2,800 people in the McCaw Hall, however, lapped up his every word. Should he ever tire of serving up the soya lattes, Schultz is spoken of as a possible contender for president himself. In his mind, Starbucks is not just the purveyor of bucket-sized beverages, but a global force for good.
That might seem delusional coming from a company that ran into a tax controversy in the UK in 2012 when it was accused of paying no tax on sales of £1.2bn in this country over the previous three years.
As for investors, they normally want companies to focus on making profits, not do-gooding.
net revenues worldwide have almost doubled since 2009 to a record £13.6bn. The company handed nearly £1.8bn to shareholders in dividends and returns of capital, and gave £118m worth of free shares to employees, including UK staff, under its Bean Stock programme.
The company paid its first-ever significant sum to HMRC this year with a bill of £8.1m on profits of £34.2m. In the previous two years, it handed over £20m in a voluntary agreement where it decided not to take deductions it could have used.
Kris Engskov, Starbucks’ top executive for the UK, says: ‘I am not surprised people didn’t find it reasonable that we had not paid corporation tax in Britain. It is our fault, because we did not explain why. We were not paying tax because we were not making a profit and had not been for many years.’ The reason, he says, was that the company signed up for too many expensive leases in prime locations such as London’s Oxford Street and as a result, the company, which arrived in the UK in 1998, only turned a profit last year.
‘People would see a queue outside our shops and say the idea Starbucks was not making a profit made no sense to them. I understand that. Britain was one of the few markets around the world where we were not making money and it was hard to admit that.’
‘There is nobody who wants to pay tax more than me. You won’t find places like Luxembourg or the Cayman Islands in our accounts.’
Starbucks moved its European headquarters from Amsterdam to London in the wake of the tax avoidance row, in the hope of dispelling suspicion it was saving tax by making royalty payments via the netherlands.
The company knows how much Britons love their tea so is this month introducing its Teavana tea brand in the UK. Teavana has a range including Blackberry Mojito Green Tea Lemonade and Black Iced Tea Lemonade that will be coming to the UK in the summer. ‘We have black tea, white tea, cold tea. If a customer comes in and says, “hey, I want to explore tea”, we can take them on an immersive journey,’ says Johnson.
Yes, yes, but what about British builders’ tea? ‘Hmmm. I’ll have to make sure the team knows about that.’
In Seattle it is coffee people treat with a near-religious veneration.
STARBUCKS opened its first Roastery in the city in 2014 – a café with bean roasting on the premises that looks like the coffee equivalent of Willy Wonka’s chocolate factory.
People can sample special reserve coffees and watch the huge roasting machine that dominates the room.
In one corner, uber-barista Sean Smoot holds court behind his counter, with equipment that resembles a bench at school for Double Chemistry. He is dressed in a yellow, black and red checked shirt, and sporting a twirly moustache that would put a Victorian paterfamilias to shame.
British coffee-lovers may be able to experience all this paraphernalia within a year or two, as Starbucks is planning to open several Roasteries in Europe.
Starbucks claims to be changing the world, or as the company puts it, ‘to nurture the human spirit one person, one cup and one neighbourhood at a time’.
That will sound like typical American schmaltz to many Brits. But whatever criticism is levelled at the company, no-one can accuse it of slacking off in the quest for the perfect coffee.