Q&A Starbucks' Howard Schultz, on America's caffeine fix

For Howard Schultz and Starbucks Corp., a business trip to Italy in 1983 changed everything. There, Schultz saw baristas, sipped espresso, and soaked in the ambience of that country's espresso bars.

Four years later, Schultz bought the Seattle-based company, and over the next two decades turned it into the world's largest coffee chain, with about 7,800 locations worldwide.

To New Englanders, that might not be so apparent because of the dominance of Dunkin' Donuts. Starbucks' chairman, Schultz, 50, spoke with reporter Naomi Aoki at the Globe earlier this month on its big competitor and the future of the company in New England and the world.

How do you take your coffee and what kind do you like?

I usually take it black, and my favorite coffee is Indonesian or Sumatran. I drink four to five cups a day.

All caffeinated?

Yes.

When Starbucks started out, it focused more on the morning coffee drinker. Has that changed?

The morning crowd used to drive the business. That's very different today. I'd say 10 years ago, more than 50 percent of business was before 10 a.m.

Today, the business is spread throughout the day. In fact, we're doing business today in the afternoon and evening that we've never done before. Going back five, six or seven years ago, we had stores that closed at 7 or 8 o'clock at night. Now we have stores that are open until midnight and others that are open 24 hours a day.

The US is Starbucks' biggest market today. Will it always be?

The biggest opportunity in terms of new geography is China. We have about 170 stores in China overall. Some people think China will be bigger than the US market. But I think the US will always be the biggest market for Starbucks.

What's the next big new thing for Starbucks?

We have been and always will be a coffee company. So many companies lose touch with who they are. Arrogance sets in, and they think they can be all things to all people. Our core business is coffee, and the experience we create around it.

Having said that, we have to continue to enhance that experience. We think we've done a pretty good job with that. We believe that music is going to be a big category for Starbucks, but it won't ever overpower coffee.

What about food? Why doesn't Starbucks offer more of it?

We've always felt very strongly that Starbucks is not a restaurant, so we do not want to be in the business of preparing food. We want to maintain the core competency of coffee. We are testing -- and fairly successfully -- lunch in a couple hundred stores now. So we're on the edges looking at that, but you won't see us making macaroni and cheese.

Given the nation's obesity epidemic, is Starbucks going to start providing nutritional information and healthier products?

We are introducing a Frappuccino Lite on a national level this summer. We are very mindful of our responsibility, and you will see a significant array of ''good for you" products coming from Starbucks in the future. We want to be the most responsible company in our industry in this respect. We tested Frappuccino Lite in the last few months with very, very strong results.

How do you view the competition in New England?

This is our 10th year here in the New England area. Dunkin' Donuts has been here for many, many years, and they've done a fantastic job. We are very respectful of their position and relationship to this marketplace. But Dunkin's is a very different business than Starbucks.

What would you say are the differences between Dunkin' and Starbucks?

We are in the business of creating an experience in our stores that goes well beyond the product. The product is not just the coffee, it's the relationship we have with our customers, the environment, the music, the entire setting.

Starbucks is not in the fast-food business. We have drive-throughs, but even our drive-throughs are an adjunct to what we do. We want to be more convenient, but we are trying to do that in a way that is consistent with the style, image, and the delivery mechanism of Starbucks. Our primary goal is not to increase transactions, it's to increase the experience in our stores.

What new products or changes do you see coming to Starbucks in New England?

We're in the early stages of growth in the New England area. I don't know what the size of the market will be here, but it's still very early.

How many stores do you see opening in the New England area?

I've been wrong so many times about underestimating the size of a market, I don't know the answer to that. In the past year, we've opened about 20 stores here.

Starbucks is now the country's biggest purveyor of Internet wireless connection, of WiFi. Has it helped business?

WiFi has exceeded our expectations. We now have the largest footprint of WiFi hotspots in North America, I think nearly 3,000 stores. And we can say unequivocally that it has added real texture to the store. WiFi is a great example of us using technology and innovation to try and enhance that experience. What we have learned as a result of WiFi is that our stores have become an extension of people's homes and offices.

Starbucks already owns a record company and sells CDs. How else do you plan to build the music portion of the business?

Starbucks recently opened the first integrated store of music and coffee at a Starbucks coffee store in Santa Monica, Calif. We're giving customers an opportunity to choose from thousands and thousands of songs that are digitally available, to customize and burn their own CD. With the technology provided by Hewlett-Packard, you can burn a CD in less than 3 minutes, which is just about the time it takes to make a latte.

The plans that we have, that we announced at our annual shareholders meeting, is to take 10 existing Starbucks stores in Seattle in May and June and integrate that technology into the stores.

How long before the CD-burning concept comes to Boston?

I don't know. But CD burning will probably be commoditized. You're going to see it in lots of places and retail environments. The difference will always be --not unlike espresso-- the romance, the delivery network, and the value added. Those are things we do pretty well.

As you license out the Starbucks brand to kiosks in airports or cafeterias, including one at The Boston Globe, how do you control quality?

If you go back to the history of Starbucks, we have been fastidious about the brand and how we grow the company. The thing we are most proud of over the last 20 years is that we've gotten big and stayed small. What we've done over the last few years is license Starbucks in places where it would be impossible or quite difficult to locate our stores. Airports are a great example. We also have deals now with supermarket operators.

Does the Globe coffee meet Starbucks standards?

(Takes a sip). I think it's pretty good.

But sometimes we have to microwave the Starbucks coffee.

That is not acceptable. We'll have to look into that and figure it out.

Naomi Aoki can be reached at naoki@globe.com.