Why Starbucks is robust in PH
In December 1997, the long queues at the first Starbucks store at 6750 Ayala indicated that a robust business was about to brew. The attraction was that Starbucks was an icon of American culture.
Fifteen years and 207 stores later, there are still queues in Starbucks stores, oddly at late hours or very early in the morning where BPO’s are located.
“We just work hard. What is the secret weapon in Starbucks? From Day One, it’s the quality of people we have in the company,” says Emmanuel T. Lopez, chief operating officer of Rustan Coffee Corporation, the local licensee of Starbucks Coffee International.
From a group of five pioneers who flew to Seattle, the birthplace of Starbucks, to learn how to set up a coffeehouse, the company has evolved to 2,700. The employees are called “partners” which is a reflection of the corporate culture of respect.
“It reminds us that we’re all in this together,” says Lopez.
The Philippines is said to be one of the best managed countries in the world, especially in operations and the customer service. He adds that the plaudit is “something that we celebrate as a team and motivates us to be even better.”
Lopez credits Angela Cole, director for operations, for effectively implementing the operational standards.
“Operational excellence is about delivering legendary service with each customer we connect with. It is about providing the highest standards of beverage quality consistently.
It is about providing a warm, welcoming and clean environment where customers can connect with themselves, with others in their community and with their neighborhood Starbucks partners,” he says.
“Angela was able to do this through her meticulous attention to detail, through her ability to get partners to focus on the key aspects of our business, through her wonderful creativity that inspires the partners, through her strong leadership skills that allow the partners to focus on everyday execution.”
One of Angela’s innovations was to create a Coffee Master Tournament to encourage the partners to enhance their skills and knowledge of coffee. “We want them to be passionate about coffee and its nuances. Angela had the idea to start a contest and crown the coffee master for the whole company to bring attention to coffee expertise.”
The program was so successful that Starbucks adopted a similar program for the international business and North America.
Lopez says their partnership with the Starbucks began in 1996 when his grandfather Ambassador Bienvenido Tantoco, chair of Rustan Group of Companies, and his cousins Donnie Tantoco and Anton Huang were visiting Seattle. They asked for a meeting with Howard Behar, then president of the Starbucks Coffee North America and Starbucks Coffee International. Behar had introduced the Starbucks brand to Japan and Singapore that year.
A developing country like the Philippines seemed like an unlikely choice for a third foreign venture since Starbucks is considered premium product targeting an upscale clientele. Yet the Tantocos convinced the company of their impressive retail portfolio.
Rustan Coffee Corporation, with Lopez’s father, Eduardo as president, was established. A team of five, including the younger Lopez, trained in Seattle for five months.
Since the coffeehouses opened early, they were up at 4 a.m. to get ready. For their “graduation,” they were tasked to open a Starbucks store in San Francisco.
“It was critical that we were sent to the US to immerse ourselves in the Starbucks culture,” says Lopez. “They said just work with the manager and get experience of opening a store. You had to be creative, resourceful and take initiative. This is not as if people are laying everything out things for you.”
He recalls doing the labor from cleaning the store, setting the merchandise, testing the equipment and brewing the beverages. That was just the physical part of setting up the store.
The arrival of Starbucks in the Philippines spawned a trend in coffeehouses. Despite the entry of foreign brands and the rise of local coffee shops, Starbucks’ presence is ubiquitous.
For a global brand to succeed, it had to adapt to the local culture. “When we started in 6750, there was no outdoor seating yet. People couldn’t smoke inside. On the first day, people asked, ‘Where can I smoke?’ We rushed to Glorietta and bought outdoor tables and chairs. That setup became popular. It spawned the al fresco setting,” recalls Lopez.
“In the States, most businesses were ‘to go.’ Customers didn’t sit around. In Asia, customers stay longer so the store designs are bigger. Starbucks International was shocked at our hours. In the States, they stay open till 8 p.m. Here, we do business till 1 a.m. With BPO’s, all the more, the hours have totally changed.”
Initially, Starbucks followed the American menu for pastries such as Danish and doughnuts. Realizing the Filipinos wanted something more familiar, Keith Cole, head of marketing category, introduced local offerings such as the ensaymada, empanada, pan de sal with filling. In fact, the ensaymada and the cinnamon rolls are the most salable in the food category.
Cole’s favorites are the tall two percent latté and the spam-and-egg sandwich which is unique to the Philippines.
On top sellers, Lopez points out the frapuccinos are more favored, owing to the Filipino penchant for coolers in the tropics. However, more people are beginning to appreciate espresso-based drinks and not just blended beverages. Lopez has been drinking iced tall Americano for 15 years and takes to drip coffee on weekends.
Merchandise also forms a significant amount of the business as there are fans of its seasonal products.
Beyond coffee and tumblers, one reason for Starbucks’ success worldwide is that it understands the personal relationship that people have with coffee. Likewise, it treats coffee as a social product and the barista as a communicator.
Lopez explains, “We provide the third place after the home and work. It resonates anywhere in the world. People need a place to take a break; a place to wake them up. It provides a place where you can do what you want. It’s a place where you can connect. We try to uplift our daily life. Regular customers feel valued.”
This stems from the corporate culture of respect and acceptance.
“We try to be respectful especially among ourselves foremost. If we can’t take care of each other, how will we take care of our customer. Ultimately that’s what generates our business. We also want to be sensitive to our community and our environment. It’s a culture that prizes entrepreneurial spirit,” says Lopez.
A company pioneer, Cole adds that loyalty is eminent at Rustan Coffee Corporation. “Noey (Lopez) is successful in fostering a great environment and in retaining good people. The tenure in our company is quite high compared to other markets. That helps you maintain people. If the people are happy, they serve customers very well. ”
Says Lopez, “We love what we do. Hopefully that extends to the customer and the community. If they feel we genuinely care, optimistically that leads to a successful business. We value integrity and the entrepreneurial spirit. As we get bigger, we remind ourselves to continue to take risks, be resourceful and innovative. We think about how we get better for the next day.”
On business forecasts, Lopez is discreet “We have this mantra: Build one store at time, one customer at a time.”