Set phasers on stun

Depending on which side you believe, a Starbucks in Minneapolis either was or wasn’t unionized this week. Either way, it may be a preview of a disconcerting future for chain restaurants nationwide.

First, the dueling realities: According to the Industrial Workers of the World, better known to our grandparents as the Wobblies, employees of the downtown coffeehouse voted yesterday to be represented by an affiliate called the Starbucks Workers Union. A statement on the Wobblies’ website said management of the store had been presented with a 500-signature petition demanding that a security guard be hired. The posting also asserted the unit’s baristas walked off the job and declared an affiliation with the SWU, though the connections between those developments was not explained.

The statement convinced the Minneapolis St. Paul Business Journal and other media to report that the store had unionized and thereby become the second Starbucks in the state to organize. But as that coverage noted, Starbucks' corporate office experienced a much different reality. No baristas walked off the job, no other Starbucks in Minnesota has been unionized, no employees had so much as asked for a union vote, and the Starbucks Workers Union isn’t even really a union.

Apparently the company’s spokeswoman had a point. The paper posted a correction under the story to acknowledge that no unionization vote had actually taken place at the store.

This is hardly a “Roshamon” kind of thing, where an event witnessed by several advisers is perceived and recounted as totally unique experiences. It sounds more like one of those “Star Trek” episodes where a character is stretched between separate and conflicting universes and facing certain oblivion unless a brilliant solution is hatched.

And guess who's playing that character in this potential pilot for the seasons ahead? That'd be you, bunkie.

Even before Barack Obama was elected last week, business groups were bracing for doom because the Illinois senator was sympathetic to unions—and, by extension, presumably their new organization tactics. Much has been written in Nation’s Restaurant News and elsewhere about card check legislation, a measure that could force employees to vote publicly on proposals by their peers to unionize. It’s hard to cast a ‘nay’ when everyone, including the zealots, can see how you balloted.

But that’s just one of the tactics that unions might use to foster the organization of restaurants, the new frontier for the labor movement. Presenting alternative realities may be another. The situation in Minneapolis underscores just how far organizers will go to push their cause. Clearly it may be a matter of going where no man has gone before.

The "I" in choice

Historians, as you probably know, are prone to fight at the drop of a three-cornered hat. Just mention the Strong Man Theory, for instance, and you’re likely to see a headlock here, an eye jab there. Before long, medieval curses will be flying, and enough tweed will be ripped to make James Lipton wince. Still, even after all the bloodshed, one faction will insist that history is driven by extraordinary individuals acting on personal agendas. And their opponents will refuse to budge from the conviction that circumstances, not strong men or women, are what change the path of human development.

So, please, if you’re holding a kegger this weekend for that rowdy bunch from Elizabethan Studies, do not mention the latest initiatives from Starbucks or Danny Meyer.

After all, USA Today’s exclusive on Starbucks’ latest menu overhaul left little doubt the chain is adopting more healthful choices because of developments in the life of CEO Howard Schultz. The article recounted how Schultz discovered during a physical that his cholesterol was too high and that he needed to pursue a more healthful lifestyle. He changed his ways, the story noted. And, at virtually the same time, so did Starbucks. First it rolled out its new healthful smoothie line. Then, Schultz disclosed to USA Today’s Bruce Horovitz, it drafted the new reduced-fat, higher-fiber breakfast array that’ll be introduced on Tuesday.

A coincidence? Ask anyone historian with a well-thumbed copy of “Julius Caesar: The Early Years” on his or desk.

Then there’s the new diversification by Danny Meyer’s Union Square Hospitality Group. The operator of such fine-dining shrines as Gramercy Tavern and Union Square Café is planning to open restaurants in the Mets’ new stadium, Citi Field, when it opens in Flushing, Queens, next year. Nation’s Restaurant News broke the story after speaking with Meyer, who acknowledged that this is more than a cold, calculated business decision. “We think Citi Field is a great opportunity in which to parlay our love of sports and launch a new division,” he told NRN’s Elissa Elan.

Clearly, neither businessman is stepping outside himself to look with complete detachment at possible new directions for their businesses. Yet both have repeatedly demonstrated they’re no Dan Quayle when it comes to spelling out opportunity. These are some of the most respected figures in the business, if not American commerce. Does that mean those of us yet to climb Mr. Olympus should consider a little more Yoda and a little less Peter Drucker? Should we indeed yield a little more to The Force we feel?

The record is at best murky. In the late 1980s, a businessman named Victor Kiam decided he really appreciated a certain type of electric shaver. “I like it so much I bought the company,” he famously told consumers in a long-running TV campaign for Remington razors. That bit of strongman business savvy worked well for Kiam; he would grow the company and remain its chairman until his death in 2001.

But personal preference also led him to buy the New England Patriots football team. It was a financial disaster for him.

Less ambiguous are the bankruptcy notices for restaurant and after restaurant that were opened because the entrepreneur liked the idea of being in that business, or really enjoyed cooking, or loved hanging out in star-studded establishments. Ego equaled disaster in those instances.

Of course, those decisions were often based solely on bias, not on business sense. Schultz and Meyer probably couldn’t have suspended their commercial intuition if they had wanted to do so.

So my bet is they’ve made good decisions, even if each choice may have been more influenced by personal criteria than other moves they’ve made.

We’ll certainly see. Perhaps starting on Tuesday.

'There goes the free Starbucks'

The worst part about getting fired from the CEO’s job at Starbucks is having to tell your mother, according to Jim Donald, who found that out for himself in January. Four months later, he was willing to talk about that day with a Fortune magazine editor, who convinced him to join two other victims of high-profile sackings for a joint soul baring of what they’d learned.

But it was far from a pity party. “This is what happens in the big leagues,” Donald remarked during the four-party Q&A with Fortune’s Patricia Sellers. He and his fellow boardroom casualties—JetBlue founder David Neeleman and former Motorola CEO Ed Zander—offered a dry-eyed assessment of why they were deposed.

Donald, for instance, said he should’ve pushed for faster international development. “The international markets don’t have as quick returns as the U.S.,” h said. “But if I’d known the U.S. economy was going to crash, I would have invested earlier.” His replacement as CEO, board chairman and former head bean Howard Schultz, has pledged to accelerate Starbucks’ development overseas while shutting weak U.S. outlets.

It was Schultz, Donald said, who actually wielded the axe, and he did it after giving his one-time protégé a hug. “It was on a Sunday evening, at Howard’s house,” Donald told Sellers and his fellow topple-ees. A greeting was followed by an embrace, then the news that Starbucks’ board had decided to make a change. Donald made it sound as if he didn’t have time to put his latte down.

The 54-year old said he headed home, where his wife expressed surprise that he’d was back already. “Laura said, ‘Wow, that was a quick meeting. Did you lose your job?’ I said, ‘As a matter of fact, I did.’”

The one-time head of Wal-Mart’s grocery operations said the most painful part of the experience was calling his mother the next day. Indeed, he said, that experience “probably” made it “the toughest day I’d ever faced, ever. Ever, ever, ever!” But, he indicated, she took it well.

Donald expressed no resentment about what happened to him. Nor did he speak of Schultz in anything but a neutral tone. Sellers asked Donald if he’d ever work again for a company’s founder, as he did at Schultz (a nit-picking point: Schultz founded Starbucks Corp., but not the Starbucks brand).

“Founders have a way of being engaged in the business, being emotionally connected to that brand or to that product,” he responded. “So would I work for a founder? Yes, absolutely.”

Miscellaneous stuff I learned at the NRA show

The National Restaurant Association’s annual convention abounds in educational sessions, including 14 on green issues alone. But many of the revelations come elsewhere, as these minor gems attest:

Who said restaurants don’t offer health insurance? Oh, sure, you may find an operator here or there that takes a progressive stance on benefits, and there’s always Starbucks, the exception that ostensibly proved the rule. But few people in the general public—much less those in the industry—would expect to find health coverage available from the mega-sized quick-service chains, where the size, turnover and young age of the workforce presumably pushed the benefit beyond the point of feasibility. Not so, McDonald’s CEO Jim Skinner revealed in his address to convention attendees this afternoon. All 9,000 of the franchisor’s company-operated restaurants now provide employees with access to coverage. But, Skinner acknowledged in one of several surprising flashes of candor, “it’s available, but not necessarily affordable.” He seemed to suggest that affordable health coverage is one of the goals the industry should pursue in collaboration, instead of each operation scrabbling in isolation. More on that in a later post.

New fruits are ready to drop on the U.S. market. You never know who you’ll see or hear among the tens of thousands who attend the restaurant show. Who, for instance, would have expected to catch a cameo appearance by New Zealand’s ambassador to the United States at the NRA’s board meeting? Yet there was Roy Ferguson (are you supposed to put an “Honorable” or something before his name?), talking about the efforts underway in his country to provide American restaurants with delectable new choices. Among the bunch, Ferguson said, are new fruits like the kiwi berry, a kiwi that could be eaten without being peeled.

But that’s not the only new fruit heading to the States. Tonight a group of us from Nation’s Restaurant News visited the Chicago outpost of Sushi Samba, the popular fusion-cuisine concept from New York. The concept’s Joanna Cisowska mentioned that the restaurant is participating in a Brazilian food festival, a first-of-its-kind event in the city that was scheduled to coincide with the convention. The festival is aimed not at consumers but at American restaurateurs who are visiting Chicago for the show. The government of Brazil hopes to promote the foods of that nation to restaurateurs from all over our country. Among the items they’ll be invited to sample is a fruit called cupacu, which Cisowska described as a new “super-fruit” that could be as warmly embraced by the health-conscious as acai. At the end of the meal, we were surprised with desserts that were made with cupacu, a purple puree that contrasted beautifully with the tapioca below it. Apparently it’s hardly a novelty in its native land.

Pasta prices are hard to hedge. Bakers can try to temper the spike in wheat costs by locking into long-term contracts or otherwise striving to hedge against the inflation. Not so with duram wheat, the sort that’s by pasta makers, a supplier explained. The market for that variation is purely transactional—buy what’s available at whatever price you can, without the benefit of long-term deals. He also revealed that the price of the wheat appears to have topped out.

James Brown has a following on the NRA board. Association director and Golden Corral chief executive Ted Fowler once described the board as “stale, male and pale,” Multicultural Outreach Committee chairman Daniel Halpern revealed to his fellow directors in explaining why his committee had been launched several years ago. Now, Halpern said, the diversification push is bringing results, though the board can’t let up in that effort. The situation, he said, brings to mind the words of “the poet James Brown: ‘I’m not asking you to give me anything. Just open the door and I’ll get it on my own.’” Get down, y’all.

Vegas hookers will run you $250 an hour. That nugget was overheard on the hotel shuttle bus from the convention hall. The speaker was apparently enlightening a less-worldly compatriot who mistakenly thought Sin City was all about gambling, shows, and eating the food of famous chefs. The forced listener looked as if he’d have paid $250 at that moment for a can of Lysol. Given the look of the speaker, he must have had a coupon to get the rate he cited.

Elephant & Castle has the best meatloaf in Chicago. Overheard during that same bus trip.

Schultz tries to foster Seattle's fortunes, too

You’d think Howard Schultz would be jittery enough without a court battle on his hands. But the Starbucks CEO filed a lawsuit Tuesday against fellow tycoon Clayton Bennett to scuttle their Seattle SuperSonics deal. Schultz agreed in 2006 to sell the pro basketball team for $350 million to a group led by the Oklahoma City financier. But when Seattle balked at building a new arena for the Sonics, Bennett alerted the National Basketball Association that he was relocating the franchise to his home town. Seattle restaurants of all stripes—including a few, presumably, in Starbucks green—have warned that the relocation would starve them of much-needed nighttime business.

Schultz may have grown up in Brooklyn, N.Y., but he’s loyal to his adopted hometown. He’s asked a U.S. District Court to un-do the deal because it was based on the assumption that the Sonics would remain in Starbucks’ home base. The team would still be sold, the complaint reportedly states. But Schultz would like to find an “honest buyer” who’d keep the Sonics in the only city the team has ever known, the Associated Press reported this morning.

Bennett, meanwhile, could end up as the trial lawyers’ poster child of 2008. He’s also being sued by the city of Seattle and fans who bought season tickets to the Sonics for future years.

Bennett has already agreed to give up the Seattle SuperSonics name, clearing the way for Seattle to secure another franchise. But he seems to be proceeding with his relocation plan. The NBA gave him a green light Friday to make the move, pending the outcome of his court fight with Seattle.

A grande serving of what?

There had to be a secret message encoded in Howard Schultz’s presentation yesterday, because even Mike Tyson would know better than to pin Starbucks’ turnaround to rickety measures like adding a new coffee roast or installing a newfangled coffee maker. And let’s not forget the pledge to do more for the environment and the startup of a social-networking site. But maybe the real message of his address to shareholders was blurred by all the specifics. If you step back and view the elements as a package, it’s clear Schultz is taking a bold gamble. The one-time coffee-carafe salesman is trying to infuse the brand with more showbiz than the industry has seen since the heyday of eater-tainment.

Schultz described Starbucks’ purchase of a company that makes a new type of coffee brewer, a device called the Clover, as the most dramatic of the steps he and other execs detailed for investors. The machine supposedly makes a cup of coffee superior enough to justify a price of more than $2.50. Schultz said he saw it being used by a place in New York that charged $7 a cup. But how it generates the nectar of the bean may be as important as the quality of finished brew. Starbucks described the machine as a cross between a French press pot and a vacuum-style coffee maker, which provides a bit of a show with every cupful that’s produced.

Similarly, Starbucks disclosed that it’s rolling out a new espresso maker that gives the baristas more control over the coarseness of the coffee grind and the way the milk is steamed. Not coincidentally, the devices are not as high as the machines currently being used, which will allow patrons to see their drinks being made, and possibly even interact with the coffee maker.

Even the new frequent-guest program has some dazzle to it. Guests present their cards to be wowed a little by the service they’re then given. The benefits rendered don’t sound that amazing. Free half-and-half or soy milk? Whoa. But the give-and-take about the freebies does give the counter servers and baristas a chance to strut their stuff a little.

The bland-sounding moves that Schultz disclosed yesterday may prove anything but. It’s a bit of razzle-dazzle from someone who could prove to be a very adept ringmaster.

Will there be another fajita?

Wendy’s touted its Frescata line as a major point of different—deli sandwiches made with bread baked in the restaurants. It was canned in December. Panera Bread said its Crispani pizza would rev up dinner sales and please patrons looking for all-natural options. The franchisor quietly yanked the item sometime after November. In 2006, Starbucks trumpeted its new premium-priced breakfast sandwiches as the long-sought way for the chain to grab more food sales. Instead, the array is on the way out. Is the blockbuster new product going the way of two-for-one happy hours and free matchbooks?

Well, there is the incredible success of sliders, the mini-sandwiches that everyone from Good Time Burgers to Cheesecake Factory is selling these days. They, in turn, are part of the miniaturization that has also led to the widespread availability of spoon-sized desserts, small plates and even small-pour glasses of wine. But, as your nearest White Castle or Krystal attests, that mini mania is nothing new.

Ditto for burgers, which are truly undergoing a second coming. Sure, they may be made now with Kobe or Angus beef, but it’s still the American classic, just gussied up with better ingredients and garnishes.

Indeed, with the exception of beverages (the mojito, cosmopolitans, Pisco sours) can you name a new chain menu addition since the middle-decade premium salad blitz that has really wowed consumers? Double points if it’s something other than McDonald’s Snack Wrap.

The dearth says something about the growing sophistication of consumers. They’re not as dazzled as they once might have been by sheer novelty. Instead, they’re looking for a true advance—better flavor, a meal more in keeping with their lifestyles or eating habits, a meaningful alternative to what they know. If that’s not in the set of options, then go with the best among the choices offered.

And, of course, now it will no longer extend to Frescattas, Crispanis or a microwaved Egg McMuffin a la Starbucks.

The night Starbucks went cold

At 5:31, a manager escorted two customers to the door, apparently explaining why the Starbucks would be closing. As she was saying good-bye, two more people tried to squeeze past her into the café for their after-work caffeine fix. They, too, apparently hadn’t heard that all 7,100 Starbucks in the United States would be closing yesterday evening for what the media alternated between calling a massive teach-in and a chainwide coffee break.

But before the unit on 57th St. in New York could move to a refresher on how to make a killer cup of coffee, the staff had to fend off customers first. The manager had locked the door and taped a cardboard sign to the window, explaining that the store was closed. But every time employees would open the door to lug a back of trash to the curb, a few more patrons would blithely push through the door, oblivious to the sign and the historic shutdown of the whole chain. Each time they’d be shepherded out by the manager, who seemed as cheerful as a 7-year-old at her birthday party.

Of course, those patrons could have satisfied their caffeine craving for a mere 99 cents by trekking just a few blocks. In an absolutely brilliant stroke of guerilla marketing, Dunkin’ Donuts cut the price of its espresso-based drinks for the afternoon and night to under a buck. Sure, the doughnut specialist might’ve snagged a few Starbucks aficionados who presumably could switch allegiance. But the real benefit was the publicity. Starbucks’ three-hour closure drew a ton of coverage in every sort of media imaginable. By tying into that event in a sly way, Dunkin’ made sure that its name was in the second paragraph, if not higher. Starbucks took the sales hit and snagged its share of hoopla. But Dunkin’ was right there with it.

One more accolade to bestow on the matter: The Chicagoist website, for coming up with the headline, All Starbucks Closing Tonight for 3 Hours, Apocalypse Imminent.

Howard Schultz's cup of tea

Now that the steam has cleared from Starbucks’ recent changes, a few conclusions can be drawn about Howard Schultz: The Second Cupping. For one thing, memo writing may be entering its heyday. The Brooklyn native’s reliance on the TO:/FROM: format is the stuff of “Dilbert.” Within hours of replacing Jim Donald as top bean, Schultz was posting notes to customers, employees and investors via Starbucks’ website. The messages echoed the themes he’d sounded in the Jerry Maguire-esque memo that was sent to management last February, urging the chain’s handlers to re-find their souls and save the specialness of Starbucks. The minute it was leaked to the world via http://www.starbucksgossip.com/, Donald should’ve started punching up his resume.

If Donald is smart, he’ll appreciate what Schultz was demonstrating with that fit of keyboard pounding last week. Schultz promised each constituency a basket of changes that amounted to reconnecting with each. The adjustments he previewed—in essence, paying less attention to bean counters to focus more on the beans—were reassurances that Starbucks hears their gripes. His high-communication style put some steel in the promise of re-forging a strong relationship, the foundation of what Schultz reverently calls the Starbucks Experience.

Contrast that stance with Donald’s approach. If his public appearances and interaction with journalists were accurate lenses, he absorbed his candor and interactive skills from Richard Nixon. A fellow veteran of the media said her interview with Donald was the most boring one in her considerably long career. The time I saw him address an industry group, he came across as a suit in casual clothing, carefully following a Communications Department script to profess his daring New Age convictions.

I’ve also had the privilege of hearing Schultz speak, some 10 or 12 years ago by now. A side effect of being a business journalist is attending conferences where the celebrity draw could be anyone from Gerald Ford to Dennis Miller to Dolly Parton. None of them came close to Schultz in inspirational quality. Because keynoters of that wattage seldom deliver news fodder, their speeches are usually the times when you check phone messages or raid the break tables outside the lecture hall. Indeed, I’m not sure I would have hung around to hear Schultz if it hadn’t been for the draw of Starbucks coffee being available while he spoke.

But once he started explaining how his father’s miserable experiences as a diaper-service driver had shaped his strategy for Starbucks, there was no leaving the ballroom, by me or anyone else. He spoke passionately about the need to balance business needs against doing the right thing for employees and cultivating a culture of which you can be proud—the same themes he’d thump in the February memo.

If it was an act, as contrived as any performance on the high-ticket speakers’ circuit, it was of Daniel Day Lewis quality. And any skepticism was completely dashed when I saw Schultz’s handlers lead him down the stage and straight toward the doorway next to which I was standing. I stepped out, stuck out my hand, and blurted, “That was great.” Then I noticed he was sweating a bit, and seemed a little quivery. He stopped dead.

“Do you really think it was alright? I sounded okay? I was kind of nervous,” he rattled.

I gaped at him, wondering for a second, Is this really him? Did I stop the wrong guy, maybe a speaker from an earlier session? Nope, definitely Howard Schultz.

“Yeah, you were great. I really mean it,” I assured him.

He broke into a huge smile, vigorously shook my hand, said, “Thanks. Thanks a lot,” and was yanked away by his handlers.

I went from there to a book store to look for a copy of his autobiography.

Persons who have worked for him have since advised me to remember that he started as a salesman and is a businessman before all else. Take him and his change-the-world manifesto with a dash of skepticism, they advised.

But, as they readily acknowledged, demythification doesn’t detract from his unique approach to running a business, nor from the specialness of Starbucks’ culture during his first go-round as CEO. Even his handling of last week’s coup was a marked departure from the usual deposing of a big-company chief. With the blandness fostered by Sarbanes-Oxley and the threat of shareholder lawsuits, you can only hope he indeed proves to be the Harry Potter of the restaurant business.

But just to make sure, I think I may head back to that book store. Maybe I can buy him an inspirational book about Steve Jobs.