Moreover, Starbucks must cope with some predictable challenges of becoming a mature company in the United States. After riding the wave of successful baby boomers through the 1990s, the company faces an ominously hostile reception from its future consumers, the twenty or thirty-somethings of Generation X. Not only are the activists among them turned off by the power and image of the well-known brand but many others say that Starbucks' latte-sipping sophisticated and piped-in Kenny G music are a real turnoff. They don't feel wanted in a place that sells designer coffee at $3 a cup.
Even the thirst of loyalists for high-price coffee cannot be taken for granted. Starbucks' growth over the early part of the past decade coincided with a remarkable surge in the economy. Consumer spending tanked in the downturn, and those $3 lattes were an easy place for people on a budget to cut back.
Starbucks also faces slumping morale and employee burnout among its store managers and it's once-cheery army of baristas. Stock options for part-timers in the restaurant business was a Starbucks innovation that once commanded awe and respect from its employees. But now, though employees are still paid better than comparable workers elsewhere-about $7 per hour-many regard the job as just another fast-food gig. Dissatisfaction over odd hours and low pay is affecting the quality of the normally sterling service and even the coffee itself, say some customers and employees. Frustrated store managers among the company's roughly 470 California stores sued Starbucks in 2001 for allegedly refusing to pay legally mandated overtime. Starbucks settled the suit for $18 million, shaving $0.30 per share off an otherwise strong sccond quarter. However, the heart of the complaint-feeling overworked and under appreciated-doesn't seem to be going away.