Starbucks CEO says chain ready to enter Italy after 35 years

Starbucks CEO says chain ready to enter Italy after 35 years
In this image taken on Monday, Feb. 27, 2017, Starbucks CEO Howard Schultz stands at the Princi bakery, in Milan, Italy. (AP / Luca Bruno)

Published Tuesday, February 28, 2017 6:38AM EST

MILAN -- Starbucks CEO Howard Schultz s vision for the chain was largely inspired by the coffee bars he saw on his first trip to Milan more than three decades ago. But it took the company growing to about 26,000 stores in 75 countries to win the credibility he felt necessary to make the leap into the country that gave espresso to the world.

As he prepares to step down as CEO in April, Schultz will focus on innovation. That includes a Milan location that will open in 2018 of what he called "the quintessential Roastery" -- one of the high-end shops featuring in-house roasting and complex coffee drinks. The journey of 35 years, he said, completes "my own dream and the circle of Starbucks."

Unsurprisingly, skeptics like 70-year-old Christine Kung see Starbucks as a coals-to-Newcastle enterprise.

"We are happy the way we are," Kung said on her way to a bar for coffee in central Milan. "We don t need to be invaded by American scenery. We already have McDonald s and that s enough."

Indeed, the entry of McDonald s into Italy three decades ago sparked the Slow Food movement that encourages local food traditions, although it ultimately did not prevent the Golden Arches and other fast-food chains that followed from becoming part of the Italian landscape.

Still, espresso drinks are part of Italian tradition and the fabric of everyday life in a way a quick bite still is not. Italians are accustomed to "taking" an espresso standing at the bar for an average price of 1 euro, or just about a dollar, even in major cities; 1.20-1.50 euros is on par for a cappuccino.

In Italy, baristas generally make the coffee in full sight of the consumer, and hand brioche and other pastries across a glass case, often with a quip. Taking a seat in an Italian bar may incur an extra charge, especially in prime locations. There are few sugary embellishments and Wi-Fi access is spotty, at best.

It is not uncommon to see waiters with silver trays delivering coffee in porcelain cups covered with foil to neighbouring business, a practice that underlies the rarity of the takeout coffee cup.

This sort of humanity attracted Schultz s admiration on his first Milan visit. His response is to position the first Starbucks in Italy as a premium operation.

The Milan store at Piazza Cordusio will be among the early wave of up to 30 Roastery locations Starbucks says it expects to open around the world. The Milan store will launch a new partnership with an Italian partner, the Princi baker, offering deli food and baked goods. The first Roastery is in Seattle, with others announced for Shanghai, New York and Tokyo.

Besides mainstay espresso drinks, Schultz hopes customers will be attracted by specialized brewing techniques developed by Starbucks that are not typical in Italy. As in other markets, customers can take coffee out, or drink out of porcelain cups if they re staying in. Starbucks says it hasn t yet determined its prices.

Located in an old post office building just steps from Milan s cathedral, the store will be the largest to date at 25,500 square feet, or about 2,400 square meters -- compared with 200 square feet for the average Starbucks location.

It is hard to gauge how many in Italy might share Kung s wariness. Schultz says market research indicates strong brand awareness among Italians, mostly from travels abroad. And younger Italians may be more disposed toward embracing Starbucks as a place to hang out. Twenty-year-old Giulia Rizzi said she is excited for the opening and has no doubt her peers will frequent Starbucks in Italy.

"When I go abroad it s a place I go to very often because I like it both for the place and for what they do, which can t often be found in Italy," she said. "Of course in Italy coffee is sacred so perhaps not everyone will like it."

But the brand took a brief battering on social media, along with city planners in Italy s finance and fashion capital, after an oasis of palm trees appeared opposite the cathedral and it emerged that Starbucks was paying for the landscaping project, chosen by the city. Vandals burned a couple of the trees.

The fate of the Italian enterprise, Schultz said, will depend on winning over Italian customers, not just tourists. Schultz has been getting guidance on how to approach the Italian market from fashion designer and CEO Brunello Cucinelli. His advice: "For Starbucks to be authentic. For us to be ourselves," Schultz said.

After the Roastery, Starbucks plans to open other locations in Milan, a combination of traditional stores and Reserve stores, which are essentially smaller Roasteries, before it looks at other Italian cities. Schultz didn t say how many stores are planned for Milan, but noted in the past 10 to 12 have opened within the first year of entering a market.

So far, Starbucks plans aren t worrying the folks at one typical Milanese coffee bar, the Giacomo Caffe with its wooden bar, round tables and straight-back chairs located in the Palazzo Reale beside Piazza Duomo, not far from the new Starbucks location.

"It is something completely different," said manager Antimo Santoro. "Their strongest point is to take away, to buy and take away. Our strong point is service, we serve a coffee of very high quality, with a very refined blend, a great service."
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