Episode 2: Starbucks vs Dunkin' | Business Wars | Full Episode

Howard Schultz's Journey Begins

A Dull Life in New York City

• Howard Schultz, a 28-year-old VP at a plastic manufacturing company, feels unfulfilled despite his success and material possessions.

• He reflects on his impoverished childhood and the pressure of maintaining his current lifestyle, which lacks purpose.

The Spark of Curiosity

• While reviewing invoices, Schultz notices unusual orders from a small Seattle retailer named Starbucks Coffee Tea and Spice.

• His wife calls to check in, prompting him to share his curiosity about Starbucks' large orders compared to major retailers like Macy's.

The Mission Unfolds

Arrival in Seattle

• Schultz arrives in Seattle on an autumn day in 1981, eager to visit the original Starbucks store located at Pike Place Market.

• He is captivated by the vibrant market atmosphere and the enticing aromas of fresh food as he approaches Starbucks.

Discovering Coffee Culture

• Upon entering Starbucks, Schultz is overwhelmed by the rich scent of coffee beans and the variety displayed around him.

• He learns about the roasting process from a staff member, realizing that quality coffee comes from beans rather than pre-packaged products.

A Meeting with Visionaries

Engaging with Starbucks Owners

• Schultz meets Jerry Baldwin and Gordon Bowker, co-founders of Starbucks, who share their passion for coffee and its nuances.

Howard Schultz's Journey to Starbucks

The Spark of Passion for Coffee

• Howard Schultz reflects on the joy of perfect coffee beans, feeling envious of Jerry Baldwin's passion for them, contrasting it with his own work in plastic products.

• During a lunch with his mother, Schultz expresses dissatisfaction with his life and shares his ambition to move to Seattle and join Starbucks, despite her concerns about abandoning his current success.

Persistence in Pursuing Opportunity

• A few weeks later, Schultz persistently calls Baldwin at Starbucks, expressing his desire to join the company despite being told there are no positions available.

• While Schultz is focused on joining Starbucks, Dunkin Donuts CEO Bob Rosenberg enjoys success with over 1,000 franchises and develops a point system for scouting new store locations.

Strategic Expansion of Dunkin Donuts

• Rosenberg’s strategy includes evaluating visibility, traffic counts, demographic diversity, and even children's bike counts as indicators for potential franchise locations.

• In 1981, Rosenberg visits international Dunkin Donuts stores in Asia where business is thriving; he observes how local adaptations have contributed to their success.

Commitment to Quality Control

• In Japan, Rosenberg insists on maintaining high standards for coffee quality at all franchises; he warns a franchise owner that failure to meet these standards could lead to closure.

• His wife reminds him of the pressure he puts on others; however, Rosenberg believes that attention to detail is crucial for Dunkin Donuts' continued success.

Frustration and Hope at Starbucks

• By winter 1982 in New York City, Schultz remains frustrated after months of trying to convince Baldwin about Starbucks' potential beyond selling coffee beans.

Howard Schultz's Journey to Starbucks Leadership

Initial Meeting with Baldwin and Baker

• Howard Schultz meets Jerry Baldwin and Zev Siegl, dressed casually in sports jackets. He feels underdressed in formal attire but aims to charm them.

• Schultz pitches the idea of expanding Starbucks across the U.S. and Canada, emphasizing the positive reactions from friends who enjoyed their coffee.

• Despite his enthusiasm, Schultz receives a rejection call from Baldwin, citing risks associated with change as the reason for not hiring him.

Overcoming Rejection

• Feeling spooked by his enthusiasm rather than impressed, Schultz paces his hotel room contemplating how to change their minds.

• After a persuasive follow-up call, Baldwin agrees to hire Schultz as Director of Retail Operations and Marketing but insists on maintaining Starbucks' current operations.

Inspiration from Italy

• While Dunkin Donuts enjoys advertising success, Schultz travels to Milan for an international housewares show representing Starbucks.

The Italian Coffee Experience

• In Milan, Schultz visits an espresso bar where he observes the vibrant coffee culture and customer interactions that inspire him.

• He experiences the theatricality of coffee preparation firsthand while enjoying rich espresso that leaves a lasting impression on him.

Formulating New Ideas

• Inspired by the passion Italians have for coffee, he envisions opening espresso bars in America upon returning home.

Dunkin Donuts Advertising Strategy

Dunkin' Donuts: The Rise of Fred the Baker

The Search for the Right Actor

• During auditions, ad executives express concern over finding the perfect actor to embody their vision. They seek someone relatable, burdened by responsibility, and exhausted from meeting customer demands.

• Michael Vale, an unknown actor with a distinctive appearance and demeanor, arrives in pajamas for his audition. His relatable look convinces the team that he is the right choice for portraying Fred the Baker.

The Impact of Fred the Baker

• The first Fred the Baker advertisement airs in 1982 and quickly becomes a sensation with its catchy phrase "Time to make the donuts." This campaign significantly boosts Dunkin' Donuts' brand recognition.

• By 1983, Dunkin' Donuts expands rapidly, boasting over 1,200 stores across various locations in the Northeast. Founder Bill Rosenberg celebrates new store openings with free coffee promotions.

Brewing Rivalry on the West Coast