Starbucks Brews Up Changes

"Some of the problems that have occurred over the last year or so have been somewhat self-induced," Schultz said. "I think we've allowed the lines between us and everybody else to be somewhat blurred in terms of what we do."

In the last three months of 2007, sales dropped 1 percent at stores in the United States open for more than one year, a first for the company. The company's stock price has dropped more than 40 percent from a year ago.

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"I think it became too corporate," said portfolio manager Patricia Edwards with Seattle-based Wentworth Hauser & Violich. "It used to be that you could go in, you could get coffee, you could get an espresso drink, that was pretty much it. And over time they added food, they added hot sandwiches, they added teddy bears, they added cups."

With so much for sale beyond just coffee, Edwards believes the company lost its unique café experience. "I think that's where their downfall has been."

The company recently announced that it would open only 2,150 stores worldwide in 2008, down from a planned 2,500. In the United States, the company will open 1,175 instead of the originally planned 1,600 stores.

In addition, Starbucks will close 100 stores that have performed poorly and cut its work force by nearly 600 jobs.

Back to the Future

Schultz, the man who made Starbucks a part of America's national culture, is back in charge again, and he's now taking decisive actions to reclaim the company's roots as a small, Seattle-based coffee roaster.

By measures large and small, he wants to put that heritage into the company's more than 15,000 stores and in the minds of its consumers.

"Our customers have forgotten that we are a coffee roaster and not all coffee is equal around the world," he said. "There are many people making claims about coffee. They are not coffee roasters and the art of what we do, that story has not been told in a very long time."

It starts with the name of the new coffee, Pike Place Roast, highlighting the company's first store, opened in 1971, in downtown Seattle's outdoor marketplace of the same name.