Starbucks on Caffeine High

This is a partial transcript from "Your World with Neil Cavuto," November 11, 2004, that was edited for clarity.

TERRY KEENAN, GUEST HOST: Growth is the key to any business. And Starbucks plans are on a caffeine high. The coffee giant posted profits that were up 48 percent compared with a year ago. It also has ambitious plans to open 30,000 stores worldwide. And in honor of Veterans Day, Starbucks is also donating about 50,000 pounds of coffee beans to our troops on the front.

Joining me now with more on Starbucks' outlook from Seattle is the chief executive-designate Jim Donald. And Jim, welcome. Good to have you with us.

JIM DONALD, CEO-DESIGNATE, STARBUCKS: Thank you, Terry.

KEENAN: I'm a big Starbucks fan, and you know, the price hikes earlier in the month or I guess in early October didn't faze me and certainly didn't seem to have fazed anybody else, because the lines are just as long.

How come people are so price insensitive to your product? Are we just addicted?

DONALD: Well, first of all, what is your favorite drink?

KEENAN: You know, I just get an — I just get an ice coffee. Plain and simple. I'm in and out that way.

DONALD: There you go. We like to think that, you know, we have got a great quality beverage, but we also provide an experience that customers want to feel each and every time they come into our store. And we are able to provide them with both.

KEENAN: You know, I noticed — we were just talking about Coca-Cola and the company CEO saying that its marketing slipped. It is interesting. Starbucks almost never advertises. What is your approach to marketing? It is a bit unique.

DONALD: Terry, we pride ourselves in advertising within each community that we operate. We have in-store marketing and we have some out- of-store marketing, such as say in New York, whether it's billboards or with buses. But our marketing is through our product, and it's also through our partner interaction with our customers, and we think we actually sell that experience each and every time a customer walks into our store.

KEENAN: You know, we have seen a bunch of retailers — I'm thinking of Sears and Kmart, their stocks going way up in value because of perceived real estate play. Is that something that Starbucks does as well? Do you own a lot of those stores, or do you have some very lucrative leases?

DONALD: No, we have — obviously we own one store, really, but we do lease our stores. But we pride ourselves on our results. And we are glad that people recognize that as well. And we keep working hard daily to improve those results.

KEENAN: And you are rolling out a lot of stores overseas. Do you think the Starbucks name will sell all over Europe and Asia?

DONALD: Well, we are in 34 countries now, and we have big growth plans as we announced in our October analyst conference to continue that growth both in the U.S. and internationally.

KEENAN: All right. Could you just quickly, any new hot drinks on the way?

DONALD: Pumpkin spice latte. We launched it in October. I got to tell you, if you haven't tried it, Terry, you got to check it out.

KEENAN: I haven't. I'll give it a try tomorrow morning. Thanks for joining us.

DONALD: You bet.

KEENAN: Jim Donald, CEO-designate at Starbucks.

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