What Starbucks' CEO has brewing

For the first time in our history . . . we have less traffic in our stores this year than we did last year. The frequency of visits is being directly linked to the consumer not having as much disposable income as they did in years past. If you talk to the economists -- people much smarter than me -- they are saying that the next six to 12 months could be worse than the last six to 12 months.

Across the board, consumers have less money than they had before, they are quite concerned . . . and as a result we have to be better than we were before to capture that market and to satisfy the customer.

The question everybody asks about Starbucks is, why are there so many?

The strategy for growth was based on demand.

When we went public in 1992 with under 25 stores, the more stores we opened the more successful we became. Many of our stores got so busy that we started opening up stores nearby. It wasn't through any research or analysis or any scientific model. We just thought the market would support more stores in an area, and as a result of that we began to open up more stores. But we never imagined that it would become as big as it became.

Tell us ways you are demonstrating to the customer new value, possibly new initiatives, new products.

There's more innovation coming at Starbucks over the next six to 12 months than we've had in the last five years.

In July we will introduce a fantastic new summer product in Los Angeles. . . . We found a fantastic new cold-beverage platform in Italy, and as a result of that we are bringing it to the market. It is a product that is both indulgent and refreshing. . . . It is steeped in Italian heritage. I can't tell you more than that.

In the coffee business, everyone is gunning for you. How do you defend your turf?

The size of the market is much, much larger than people have initially realized. Despite how big Starbucks has become, we only have 8% of the total U.S. coffee market in terms of cups that are consumed. There is a big market out there, and that's why you see other players trying to capture it.

It is harder to maintain leadership in many ways than to become the leader.

One of the things we have tried to do over a long period of time is really build a company that has a conscience, that achieves a balance between profitability and a level of benevolence. People sometimes miss that because the headline is so often the ubiquity of the company, the growth of the company. But we have also done things that no other company has done before in the way we have tried to build the business.