“We Don’t Need Any Partners in Germany”

There is no doubt about it: With 9,000 coffee bars worldwide and 100,000 employees, Starbucks is a complete success story. Over the past five years, profit has quadrupled. Alone during the past year, sales have risen by about 30 percent to $5.6 billion. Four new cafes open each day.

But in Germany, the ailing retail giant Karstadt Quelle recently had to give up its 82 percent stake in Starbucks' German subsidiary, Starbucks Deutschland.

The growth targets set when the first German branch opened in Berlin in 2002 no longer seem realistic. Starbucks wanted to open 180 branches by 2007. At last count, the company could boast 37 cafes in 15 German cities.

But neither Starbucks Chairman Howard Schultz nor the managing director in charge of the German market, Cornelius Everke, seem to be worried by the development. They say that Starbucks cafes in Germany are busy, that the company receives plenty of job applications as soon as a new branch opens and that German customers are not that different from their counterparts in the United States.

"The decisive factor is that Germany offers potential for hundreds of Starbucks branches from our point of view and based on our experience," Schultz and Everke told the Frankfurter Allgemeine Zeitung – even though they no longer mention concrete growth targets.

Starbucks usually relies on partnerships to run its business abroad. But ever since Karstadt Quelle pulled out, business in Germany has been fully in the hands of the US parent company headquartered in Seattle. According to Schultz, this set-up is not going to change in the near future, even though it makes Germany an exception within the group.

"We don't need any partners to develop the business in Germany. We won't send out any signals that suggest we're looking for a partner anytime soon. We have enough resources on our own," says Schultz, who expects that Starbucks Deutschland has developed enough expertise to grow without the help of a third party.

"At the beginning, the support from Karstadt was very helpful when it came to choosing suitable real estate," Schultz admits, adding that the existing cafes now show that Starbucks does not only attract a lot of visitors, but customers with strong purchasing power. That, says Schultz, pleases potential landlords.

The conditions under which Karstadt gave up its stake in Starbucks Deutschland have never been disclosed. There are rumors that the retail group was paid back most of its investments. Schultz doesn't want to make any negative statement about the cooperation: "Karstadt simply had such great difficulties with its core business toward the end that it cast a shadow on our growth targets."

Apart from the number of branches, 37, and employees, about 500, little is known about how Starbucks Deutschland is doing. Schultz' statements about the business situation remain quite vague as well: "Of course the German economy is currently under a lot of pressure, but we have been very cautious and are seeing now that the typical 'community feeling' among Starbucks customers has already emerged in Germany as well. That's why we are very confident regarding the German market."

In fact, the majority of German branches probably already yield a profit today. Schultz manages to convey the convincing mixture of modesty and optimism that characterizes a successful US entrepreneur, who has selling in his blood: "Of course, the success we've seen so far is no guarantee of automatic success in other countries. We always have to earn customer confidence from scratch. We're still at the beginning in Germany - the possibilities are huge."