Bloomberg, the largest U.S. coffee-shop chain, must pay $105 million in penalties because the company's supervisors in California took a share of servers' tips, a state judge ruled.
``This whole case was about restitution,'' an attorney for Starbucks servers said. ``It was about requiring Starbucks to repay the baristas for the money it had taken from the tip pool to pay the shift supervisors.''
Starbucks, which said it will appeal, argued supervisors "deserve their fair share of the tips,'' according to a statement from spokeswoman Valerie O'Neil.
AP, Over the last two decades, Howard Schultz took Starbucks Corp. from a handful of quaint coffee houses and turned it into one of the world's most ubiquitous and popular brands.
With the company faltering amid a sagging economy and increasingly fierce competition from cheaper rivals, his new job is to turn things around -- slowing growth in the U.S. and closing some shops, ramping up expansion overseas, streamlining management and focusing more on things such as new drinks and other products that will draw customers back.
After more than a decade of impressively steady growth, Starbucks shares have been in free-fall over the past year, plunging more than 50 percent.
Bloomberg, "We began to see a slowdown in traffic that we believed was economy-driven,'' Schultz said. "As we look at the balance of calendar '08, I don't see any reason to believe that we're going to see a change.''
After taking over as CEO for the second time on Jan. 7, Schultz, 54, said Starbucks' problems were ``self-induced'' and vowed to introduce more innovative products and clean up aging stores.
Forbes.com Since Howard Schultz took back the espresso machines at the coffee-slinging company he founded, he has preached returning focus to the customers at Starbucks. On Thursday, he announced a change to the company's U.S. operations that is intended to do that, but at the cost of 600 jobs.
"In order to reinvigorate our company we must continually analyze and review every part of our company operations. This rigorous look at our business will ensure that we are managing and optimizing our resources as effectively as we can in order to improve the Starbucks Experience," said Schultz in the letter.
The Starbucks employees are being fired less than a week before the company plans to close its doors for a company-wide three hour employee training session on the "Art of Espresso."
In the six weeks since his return to the chief executive role, Schultz's agenda has included the chain's recent announcement that it would be doing away with its warm breakfast sandwiches because the smell of the offerings overpowers the coffee aroma. This move will give McDonald's a leg-up on the breakfast market, but will reposition Starbucks as a high-end coffee retailer. (See: "Starbucks: Ooh, That Smell" ) But Starbucks is also exploring the bargain market, testing $1 cups of coffee in its home town of Seattle.
Another recent change at Starbucks was the dropping of its current wireless Internet provider, T-Mobile, the mobile communications subsidiary of Deutsche Telekom, for a lower-priced deal with AT&T.
To communicate better with employees and customers, Starbucks will solicit ideas and give feedback through an Internet site at http://www.mystarbucksidea.com/.
Despite the cheaper premium brew that McDonald's Corp. and Dunkin' Donuts have added to their menus, Schultz and some analysts don't believe such competition is that big a threat.
"I think people would be hard-pressed to find quantitative evidence that competition has been an issue," Zackfia said. "At the end of the day, Starbucks has always had lower-priced competition. What they need to reemphasize in the stores is why customers should pay them the premium price."
Schultz, who was Starbucks' CEO from 1987 to 2000, said the company's heavy emphasis on growth in recent years has blurred its focus on ways to keep customers happy. He shouldered some of the blame for that.
"I haven't been engaged in our stores with our customers for a very long time," he told The Associated Press, promising to push for changes that differentiate Starbucks from its rivals.
"When you succeed at this level for so long ... you get a little soft," Schultz said. "We have to get back to what made this company great, and that is to have the courage and curiosity and the commitment to do things that have not been done before."
In addition to rolling out new drinks, Schultz said the company will work to get the growing number of people who buy bottled and canned coffee drinks -- hugely popular in Asia -- and packaged coffee to frequent stores.
