Starbucks CEO talks about growth, prices

Expansion, milk prices and streamlining stores were themes for Starbucks Corp. during a third-quarter earnings conference call Wednesday.

Chief Executive Jim Donald, in a phone interview with the Seattle P-I, spent a few minutes talking about recent developments for the world's biggest coffee chain. Here are excerpts.

		Dan DeLong / P-I
	Starbucks CEO Jim Donald says he takes a long-term view.

Q: The company expects to open another 2,600 stores in the 2008 fiscal year. Where will most of that growth occur?

A: All over. ... What we're doing in the U.S. and internationally is looking at filling in markets. I can't really get specific, but we are filling in markets throughout these areas that are continuing to tell us we need more Starbucks stores. ... China will be a big emphasis, as well as filling in the U.K., Japan and Canada.

Q: Starbucks raised prices by an average of 9 cents Tuesday, even though Chairman Howard Schultz said May 3 that there were no plans to raise prices. Why was there a price boost, and what has been the response from consumers?

A: When Howard said that, we had no clue we would be looking at 100 percent increase in dairy (cost). ...(Tuesday) there was a price increase of about 3 percent. It has only been one day, but we are not hearing from our customers. We are explaining to our customers about the cost of dairy and other commodities and the fuel arena is creating this. They are seeing it in restaurants and grocery stores.

Q: Do you still plan to use milk products without rBGH (Recombinant Bovine Growth Hormone, an artificial growth hormone) at all stores by the end of the year, even though that's more costly?

A: Yes. We are looking at that based on consumer requests. ... We will listen to what consumers are saying, and this is what they prefer.

Q: Your stock price has declined 23 percent this year. What do you do to bring that price up and mollify investors?

A: Watching the business takes care of the stock price. We don't manage the business for the stock price. We manage it for the long term to provide value to shareholders, not on a quarter-by-quarter basis but over a long period of time.

Q: You have started promoting "Arctic Tale," a movie about global warming. You also this year began promoting Paul McCartney's latest album. How has the media business affected Starbucks?

A: We don't promote it as a draw or destination. We promote entertainment because it's who we are and what we have done and what we always had in place. What we are finding is having entertainment as a core part of our store is what the customers are looking for, and they are showing it by purchasing books or CDs.