Yahoo Finance Presents: Howard Schultz

On this episode of Yahoo Finance Presents, Julia La Roche speaks to former Starbucks CEO Howard Schultz about his new initiative to help local restaurants and the effectiveness of Congress' $2 trillion coronavirus relief bill.

Video Transcript

JULIA LA ROCHE: I'm Julia La Roche, and on this episode of "Yahoo Finance Presents," we're joined by Howard Schultz, the former CEO of Starbucks. And he is now running, with his wife, the Schultz Family Foundation. They have a new program out. Howard, thank you so much for joining us.

HOWARD SCHULTZ: Thank you, Julia, for having me. Appreciate it.

JULIA LA ROCHE: Howard, you just came out with a new program called the Plate Fund. Tell us more about it.

HOWARD SCHULTZ: Sure. Well, thank you for the opportunity to talk about the Plate Fund. We launched it this morning. And based on the fact that in greater Seattle, not unlike what's going on throughout the country, there are almost 5,000 restaurants that have been closed for the last three weeks. Restaurant workers, about 100,000 in greater Seattle, have not had a paycheck in three weeks. Government assistance, unfortunately, is going to be weeks away. And we recognize this is a group of people that really needs our help. They are in dire, dire need, facing home insecurity, food instability.

And so we designed a very innovative program to crack the code on getting cash in people's hands. And we launched this morning, and we're delivering $500 within 48 hours of people signing up. And about 20% or even greater-- I don't know the exact number within the restaurant community in Seattle-- are undocumented workers. They too will be available for this money.

And so this is an opportunity to understand, I think, the impact of the coronavirus clearly is a global catastrophic event, absolutely, in which no business, no organization, no person is going to be immune. No one is safe. But there also is going to be, on a parallel basis, an extraordinary amount of economic carnage. And small businesses and restaurants specifically are going to suffer dramatically.

And as a result of that, you saw 10 million people apply for unemployment. It's hard to believe. There's going to be a lot more. And in Seattle, we're trying to do everything we can. I spoke to the mayor and the governor in the last couple of days, and I was told something I guess I'm not surprised by, and that is the system for unemployment has crashed in the state of Washington. And that's not going to be an anomaly around the country.

And so while the government is trying to do all they can, I recognize with our Family Foundation that seeded the Plate Fund-- and we've raised a few more million since we started-- that this has to be a combined effort of shared humanity, of business, of nonprofits, and the government coming together without any blame and shared humanity to do everything we can to walk in the shoes of people who, unfortunately, at this point in time, to no fault of their own-- these are hardworking people-- are facing such a desperate situation.

JULIA LA ROCHE: Howard, you're talking about economic carnage, a shutdown in Washington, of folks trying to apply for unemployment insurance, a really dire picture. You're doing this in Seattle. You were just mentioning some numbers, the interest in people who are applying to get that cash and to get it fast. My question for you is, are you thinking bigger than Seattle, beyond Seattle? And how are you bringing in partners at this point, corporate organizations, to help you scale?

HOWARD SCHULTZ: Well, if I do the math, we're going to need to raise over $30 million in the days and weeks ahead. I'm confident that given the groundswell of interest and support-- not only from people and foundations that can write big checks, but we're already getting small donations. And I'm really-- it's been so emotionally satisfying to see that since we've launched at 7 o'clock this morning.

I've already gotten calls from other cities and leading restaurateurs saying, is this a model that you can help us with with other cities? We're just-- this is day one. This is, like, hour three. Let's build a foundation for what we're trying to do here in Seattle. We're going to open source this and make this available for anyone who we can help. We're partnering with an organization called Up Together, which is a cash transfer digital platform. And they have the ability to create this kind of platform and opportunity in other cities.

So we will certainly assist anyone who wants to try and do this. The need is certainly greater than the amount of money we've raised to date. And we have to reach a lot more money, a lot more awareness. So I appreciate the opportunity to talk about the Plate Fund.

JULIA LA ROCHE: And it's remarkable how fast you're getting cash into folks' hands. You mentioned 48 hours. We just had the historic $2-trillion stimulus package pass. What do you make of the stimulus? And it sounds like the speed is the issue. What happens if we don't get cash into folks hands immediately?

HOWARD SCHULTZ: So as part of the due diligence for this effort, we have spoken to many restaurant owners in Seattle as well as restaurant workers. And the common theme, unfortunately, was that the bureaucracy, the red tape, and the way the system has been just overloaded with demand-- people are very frustrated and concerned that this isn't happening fast enough, and there's a lot of bottleneck. That's one thing.

The other issue is, I think it's clear to members in Washington, and certainly to businesspeople, that the $2 trillion is not going to be nearly enough to satisfy the economic issues. In the same context that we're trying to flatten the coronavirus curve, we have to flatten the economic curve of despair. What that means to me is that it could very well be over 30% of small business owners and restaurants who will not be able to reopen their stores.

Now, these are not big companies. These are small businesses, mom and pop, independent people, entrepreneurs who have struggled to do everything they could to build this business. And all of a sudden, it might be gone. So in my view, I would hope that members of Congress are looking at a way to create a backstop, and looking at it now, so that the landlords and the mortgage holders have some kind of facility that is government-backed not to put these people out of business.

And in view of that, I think the $2 trillion needs to be a lot more-- and I could see it exceeding $5 trillion. And I would hope that members understand that the time to execute and plan for this is now, not when we are weeks and months away. This-- the need for a comprehensive plan would go so far in satisfying, I think, the epidemic of fear, uncertainty, and panic that is now going through the country as well as the coronavirus.

- Howard, you and I have talked about this before. And again, the picture that you're painting, it's so dire. And it just hits at the core of our humanity, if you will. We've talked about wealth inequality in this country. Do you see this playing into that? If we don't address this now, what does that mean for the inequality in our country?

HOWARD SCHULTZ: Well, as you and I have spoken many times, having grown up in public housing, this is something that has always been with me and with me today. I think way before the coronavirus started spreading throughout the world and the US, I spoke about a crisis of capitalism that has existed in this country.

Now, the interesting thing is I think the foundation of capitalism can be a source of trying to create a solution for the problem we have right now in trying to help people who can't help themselves. But when we talk about the corporate tax cut that went into effect and all those things that have benefited corporations, I think this is a wonderful opportunity to take a step back and ask ourselves, how can we really balance all of this on a go-forward basis so we do address the issue of inequality in a way that there is more fairness in the system, and people do have more hope and more aspirations that we're all in this together?

And unfortunately, given the fact that so many businesses are under unbelievable stress and survival for themselves, it's going to be very hard for them to have this kind of dialogue now. But I'm hopeful that we will get through this-- and we will-- there'll be a realization that there has to be more fairness, more sensitivity, and more balance to do everything we can in a more humane way for people who don't have the opportunities that they should have.

JULIA LA ROCHE: All right. You mentioned it's a little too early for that dialogue, but do you have any kind of thoughts of what that might look like? How do we create more fairness?

HOWARD SCHULTZ: Well, I think at some point, we're going to have to relook at the corporate tax system. At some point, we have to relook at the corporate tax system. That's for another day here. I'm not here to talk about politics. I am here to talk about our shared humanity and shared responsibility.

JULIA LA ROCHE: Well, speaking of shared humanity, I do want to point this out. I know you're not involved with the day-to-day of Starbucks anymore, but Starbucks, even going back to when you were there, even from the very beginning before y'all went public-- health care for all employees, whether part time or full time, equity in the form of stock options, later on, the benefits around education.

If you're looking now at what Starbucks has been doing-- guaranteeing pay for their workers, whether they work or not, make sure they feel comfortable boosting wages for those who do choose to work, and even serving our frontline health care workers-- I guess my question for you, Howard, is what responsibility do companies, specifically the big companies-- not the small companies, per se, because they don't have the balance sheets-- what kind of responsibility do they have? And do you think we'll have a rethink of capitalism when we get through this to the other side?

HOWARD SCHULTZ: Well, I think that is a very good point. Starbucks is not a perfect company, but if you look at the things we have done over the years with comprehensive health care before the Affordable Care Act, equity in the form of stock options, free college tuition, and now, under Kevin's leadership, following through on managing the company through the lens of humanity and paying all of our people-- I think it really says so much about making sure that all stakeholders, shareholders, and customers, and most specifically, your own people, are valued at a time of crisis.

I think when we do get through this, there is going to be a lot more conversation on behalf of all stakeholders that there has to be a common thread, a common understanding, and a common commitment to serving our people and serving the communities that we are-- in terms of our customers that are the lifeblood of our business. And when I see so many companies now-- I wouldn't say turning their back, because that would be unfair. Every company is trying to do everything they can to survive.

Unfortunately, survival in many cases means that people are being furloughed and let go without pay and without benefits. And it's very unfortunate. That speaks to the 10 million people who just filed for unemployment. But this is a crisis that, obviously, no one could have seen. But it is unfortunate that the balance sheet and the economic issues of many companies are forcing them to make draconian decisions. And the people who are suffering the most are the employees.

JULIA LA ROCHE: And I should also point out, Howard, that you, through Starbucks when you were there, worked with the Opportunity Financial Network, I believe. You have experience working with small businesses. Based on your own experience, if we even move beyond just the restaurant sector, what do you think can help small businesses that are really the backbone of this country?

HOWARD SCHULTZ: Well, I think small businesses are going to be facing the most significant challenges of their business life today and in the coming weeks and months of just whether or not they can survive. And most businesses that are small, and restaurants specifically, run their business month to month and rely on the support of their bank, the support of their landlord, and support of their vendors.

And so we need a comprehensive approach now to everybody understanding. But let's just take the situation. If you're a landlord, and you're demanding the rent of your restaurant or small business a month or two out, and that person can't pay the rent, and they end up leaving, your space, your environment is going to be empty. And it's not going to be filled for a long, long time. So there is a shared interest that we all have in seeing how can we work together to ensure survival.

And the issue-- I hate to say it-- the issue is survival, is how do we survive in this environment. And that's what every small business is going through. And the workers cannot survive with weeks going by between now and government assistance without some cash infusion. And that's why we created the Plate Fund.

JULIA LA ROCHE: And, I mean, when I think about just the way I go about my daily life outside of-- I guess pre-quarantine, you know, going to Starbucks, you always called this the third place. And you would go and congregate at places, and they're parts of our daily routine, if you will. What do you think happens going forward just with the broader consumer? Do you think that we'll gather again?

HOWARD SCHULTZ: I think that's a very, very important question. So here's how I think about that. I do believe that the pattern recognition that we've had has been disrupted by us self-isolating and being home. And when we get through this, the question is, will people return to their normal way of life?

I think it's going to take some time. People are not going to have as much money as they did before. There's going to be issues of personal health and safety. But the contrary view of that-- and this is, I think, where I come out-- is that I think people are going to be longing for human connection, longing for a sense of community. And I think Starbucks would benefit from the fact that we will open our doors once again to that third place experience and shared experiences. And I think people are going to want that.

At the same time, there's going to be less stores, independents, retailers, because there is going to be maybe 30% that are going to be gone. So those that will survive will do better in a new environment. But we have to do all we can to try and make sure that as many of them survive as possible.

JULIA LA ROCHE: And Howard, you and I have often talked about, in our previous conversations, leadership, crisis of trust, crisis in leadership. Where are you finding leadership these days?

HOWARD SCHULTZ: Well, I think for those leaders that have been transparent, that have been honest, that have over-communicated with their people, that have tried to put their people first. But I'll tell you, in greater Seattle right now, there are restaurants that may not survive. And every night in Seattle, restaurants are opening their kitchen-- listen to this-- not to sell food. They're opening their kitchen for people who do not have money for food.

That's happening in Seattle, and I'm sure it's happening all over the country. These are heroic people, unsung heroes. And this is what we need. And when I see that, I have great faith in the American people, great faith in our ability to get through this. But I just-- I also hope that the people in power, in Congress, recognize that this is a moment in time where we need no blame, no partisanship. What we need is people coming together and walk in the shoes of the American people. Please do that.

JULIA LA ROCHE: Yeah. Howard, I was going to ask you about the stories that inspire you. It sounds like you're seeing moments of heroic folks within your own hometown of Seattle. I thank you so much for joining us. And we wish you all the best as you reach out to the community through the Plate Fund.

HOWARD SCHULTZ: Thank you very much. Thanks for the opportunity. And please spread the word about the Plate Fund. [INAUDIBLE] Stay safe for you and your family, and hope to see you soon. Thanks for the opportunity.

JULIA LA ROCHE: Thank you, Howard. Appreciate it.