Remembering Il Giornale, the Starbucks predecessor founded by Howard Schultz

I love Starbucks. Where else, but the ultimate coffeehouse, can you get The Best in the World ™ of anything for a little over £3? The best watches, cars, holidays, shoes, wine, steak and clothes typically break the bank, but Starbucks offers a literal taste of luxury for an affordable price. To a large extent, the coffee is just a means to an end. You see, Starbucks sells a lifestyle – even for just an hour. And that makes it endlessly evocative.

Thankfully, the coffee behemoth has now reached ubiquity here in the UK, just as it did in the US decades ago. Most British cities have numerous Starbucks outlets, while drive-thrus are cropping up along popular commuter routes. It is difficult to avoid Starbucks at this point, and I, like millions, enjoy its warming wares multiple times per week.

However, few of my fellow coffee snobs are aware that, save for a relatively unheralded business deal 36 years ago, Starbucks may never have entered the global lexicon. If the stars did not align, we may all be addicted to Il Giornale, the long-forgotten precursor to Starbucks founded by Howard Schultz, the company’s transformative CEO. We may all be drinking from cups bearing the likeness of a Roman messenger god, rather than that of a mythological mermaid, and this piece explains why.

How Starbucks started

The Starbucks origin story is well-worn at this point. For decades, coffee was considered a functional commodity in America – cheap, instant Joe served to busy workers from greasy diners in styrofoam cups. Coffee was fuel, not philosophy, and people thought little of it. Then, in the 1960s, a Dutch tinkerer named Alfred Peet sparked a subterranean counterculture around the sourcing, roasting and blending of specialty coffee in Berkeley, California. Finally, in 1971, three Peet customers – Jerry Baldwin, Gordon Bowker and Zev Siegl – formed Starbucks using the Dutchman’s template. The rest is sweet, caffeinated history.

There is far more nuance to this popular retelling, though. Located in Seattle’s historic Pike Place Market, Starbucks initially sold high-quality coffee beans for home use. Drinks were neither prepared nor sold on the premises, but fine arabica coffee became an instant hit in the Emerald City. Starbucks gave Seattleites access to great coffee, not the canned slurry of Folgers or Maxwell House endured by the mainstream, and trendy acolytes embraced the concept.

Howard Schultz was among that cohort. An unfulfilled Xerox salesman in the labyrinth of New York City, Schultz became the US general manager of Swedish kitchenware manufacturer Hammarplast in 1979. A few years later, Schultz noticed an uptick of plastic cone filter orders from one client out west. That client was Starbucks, which taught customers to place the Hammarplast filters over thermos jugs to create refined coffee drinks. Schultz paid a visit to the boutique coffee emporium and was intoxicated by its ineffable magic. Quality coffee was the future, he decided, and a vision unfurled before him. 

By turning Starbucks into more than a mysterious middleman between the esoteric growers, reclusive importers and haughty consumers of quality coffee, Schultz saw tremendous potential – even if the original owners seemed allergic to growth and scalability. After much debate, Schultz convinced Baldwin and Bowker to hire him as Starbucks’ director of retail operations and marketing in 1982. Despite reservations from ownership, Schultz vowed to make Starbucks an all-inclusive coffee hub, and a 1983 visit to Milan, Italy, turbocharged his ambition.

Howard Schultz, Milan, and the rise of espresso in America

On the 15-minute walk from his hotel to an international houseware show, Schultz was captivated by the cosy espresso bars sprinkled through the Milanese streets. He sampled several establishments and was enchanted by the signature espresso and the culture surrounding it. Schultz discovered that, in Milan, coffee was not a transactional morning chore, as it was in mainstream America. Rather, in Milan, coffee – especially espresso – was a lyrical pleasure, and coffee bars were elegant fulcrums of daily life.

“As I watched, I had a revelation: Starbucks had missed the point – completely missed it,” wrote Schultz years later in Pour Your Heart Into It, a volume of memoir. “This is so powerful! I thought. This is the link. The connection to the people who loved coffee did not have to take place only in their homes, where they ground and brewed whole-bean coffee. What we had to do was unlock the romance and mystery of coffee, firsthand, in coffee bars. The Italians understood the personal relationship that people have to coffee, its social aspect. I couldn’t believe that Starbucks was in the coffee business, yet was overlooking so central an element of it. It was an epiphany. It was so immediate and physical that I was shaking.”

Schultz’ belated ‘discovery’ of espresso in Milan, and his subsequent transplantation of it to America – subsumed through the eventual popularity of Starbucks – is perhaps the greatest coffee innovation of our time. Though often criticised, Schultz revolutionised the coffee industry and made chic coffee culture possible outside bohemian Europe. Schultz made coffee more than posh beans percolated at home. He made it theatre, art and sophistication – a luxurious experience, holistically. Espresso became the nucleus of all popular coffee drinks, but the journey was not linear. Hence the brief yet fascinating interlude of Il Giornale, a proving ground for the innovations we now take for granted.

Howard Schultz left Starbucks to start Il Giornale

In short, Baldwin and Bowker never shared Schultz’ ambitious vision for Starbucks. They were coffee roasters, first and foremost, and Baldwin was particularly hostile to entering the ‘restaurant business,’ as Schultz proposed. However, after much nagging, in April 1984, Schultz was finally allowed to open a Starbucks espresso bar in Seattle, at the corner of Fourth and Spring. There, he trialled bold ideas inspired by Milan – even serving Starbucks’ first latte – but failed to convince the traditional owners. Despite strong financial results from the trial espresso bar, Baldwin and Bowker balked at expansion. Instead of indulging Schultz, they doubled down on beans, not drinks, buying out Peet and his four locations. Schultz was devastated, but his belief in quality coffee never died.

Schultz played pickup basketball on a weekly basis, and one of his teammates, corporate lawyer Scott Greenberg, encouraged Howard to strike out on his own. Schultz did just that late in 1985, leaving Starbucks to establish Il Giornale, a separate coffee company. Schultz still used his Starbucks office while conceptualising Il Giornale, and an amicable relationship between the brands saw Baldwin and Bowker invested $150,000 in the startup. Bowker even suggested the Il Giornale name, which came from an Italian newspaper and alluded to the daily ritual of espresso consumption. Schultz agreed to use Starbucks’ beans exclusively, creating powerful symbiosis with Il Giornale from the start.

Dawn Pinaud was soon brought on as the first Il Giornale employee, and she handled a broad remit as Schultz fiddled with design and branding concepts. An early Il Giornale menu is preserved on the Starbucks website. For a logo, Il Giornale overlaid the head of Mercury, a Roman messenger god, on a familiar green circle. A red version was also used occasionally. Schultz finalised much of the branding after revisiting Milan, this time with Bowker, in December 1985. The pair took photos and scribbled notes, before Schultz devised an ambitious company roadmap.

“From its inception, Il Giornale was intended to be a major enterprise, not just a single store,” wrote Schultz in Pour Your Heart Into It. To that end, the company required $400,000 to open its first store, while eyeing a further eight locations in its launch phase. Eventually, Schultz wanted to operate Il Giornale stores in every major US city and for it to become the definitive coffee chain in North America. Il Giornale targeted 50 stores in its first five years, and Schultz was determined to eclipse that goal.

In need of a gourmet coffee savant to support his grandiose plan, Schultz collaborated with Dave Olsen, proprietor of Café Allegro, a respected coffee grotto in Seattle’s university district frequented by professors and students alike. Keen for a slice of the downtown action, Olsen became the ‘coffee conscience’ of Il Giornale and, later, Starbucks. Hired part-time for $12,000 per year, Olsen mastered the nuts and bolts of speciality coffee – sourcing it, preparing it, serving it – and became the perfect foil for Schultz’ big-picture daydreaming.

Schultz rented a tiny office on Seattle’s First Avenue while still raising seed capital for Il Giornale. On top of Starbucks’ contribution, Schultz received investments from Carol Bobo and Ron Margolis, a married couple, despite the fact Margolis was not a coffee drinker. Arnie Prentice, co-chairman of a financial services firm, also pitched in a substantial investment. Schultz received hundreds of rejections while knocking on doors, but scrimped together enough cash to open the first Il Giornale store – in Seattle’s downtown Columbia Center – on 8 April 1986. For Schultz, this was the moment of truth, and he delivered on his promise to revolutionise coffee.

Il Giornale history – Inside the Starbucks predecessor

At just 700-square feet, the first Il Giornale store was relatively cramped. Indeed, after installing a Milanese espresso bar, Schultz had little spare room. Chairs were initially absent, while paninis were prepared in the First Avenue office, where three desks were jammed together. The original Il Giornale also played Italian opera on a loop, to mixed reviews. Baristas wore white shirts and dorky bowties. Newspapers of the world were available to purchase. There was certainly a unique vibe to Il Giornale, even if some found it a little contrived.

Jennifer Ames-Karreman was hired as one of the very first Il Giornale baristas. She made and served a wide range of espresso-based drinks, introducing Americans to a new panoply of taste. Finally, true to Schultz’ vision, coffee connoisseurs enjoyed specialist drinks – caffe latte, café Mocha, macchiato, caffe con Panna – away from home, and often en route to work, thanks to paper takeaway cups that would have been admonished in Italy. Those connoisseurs also embraced the Italian vernacular, which encompassed different cup sizes – espresso sold for 50 cents, solo latte for $1.10 and doppio latte for $1.50. Schultz and Pinaud literally made up those cup size names during an impromptu brainstorming session. They, and the drinks they contained, transformed coffee-drinking in America.

Schultz knew he was building something significant, even while struggling to pay bills and make payroll in the early days. “Il Giornale will strive to be the best coffee bar company on earth,” he wrote in a memo to employees. “We will offer superior coffee and related products that will help our customers start and continue their work day. We are genuinely interested in educating our customers and will not compromise our ethics or integrity in the name of profit. Our coffee bars will change the way people perceive the beverage, and we will build into each Il Giornale coffee bar a level of quality, performance and value that will earn the respect and loyalty of our customers.”

By June 1986, Il Giornale met the impound number that allowed it to access new swathes of original investments. New supporters also came aboard, including acclaimed saxophonist Kenny G and plumbing magnate Harold Gorlick, who pledged $200,000. On the whole, though, Schultz found it difficult to attract investors, as most venture capitalists pivoted to Silicon Valley and emerging tech. Undeterred, Schultz explained his vision to anyone who would listen – and enough believed in him to make it reality.

“What we proposed to do at Il Giornale, I told them [investors], was to reinvent a commodity,” wrote Schultz in Pour Your Heart Into It. “We would take something old and tired and common – coffee – and weave a sense of mystique and charm that had swirled around coffee throughout the centuries. We would enchant customers with an atmosphere of sophistication and style and knowledge." 

To that end, Schultz was fiercely protective of the Il Giornale experience. As detailed in Starbucked, a wonderful book by Taylor Clark, Schultz even had a popcorn vendor kicked out of the Columbia Center because the scent of his buttery wares interfered with the Il Giornale ambience. Similar turf wars plagued Il Giornale’s own food offerings, as Schultz safeguarded the enticing coffee aroma as an intangible product.

Driven by this meticulous attention to detail, Il Giornale grew quickly through the summer of 1986. A second store – located in the Seattle Trust Tower at Second and Madison – came in August. A $750,000 investment arrived from Jack Benaroya, Herman Sarkowsky and Sam Stroum – powerful Seattle businessmen – soon thereafter. And by September 1986, Il Giornale served more than 1,000 customers per day. Schultz hired Christine Day as an assistant and even sent roving baristas, known as the Mercury Men, into nearby offices with portable coffee taps. A third store offered proof of concept, and Schultz felt vindicated.

Starbucks sold to Il Giornale, merged into one coffee powerhouse

Indeed, without an unforeseen quirk of fate in March 1987, Il Giornale may have continued to expand. However, at that point, Baldwin and Bowker decided to sell Starbucks – including its six Seattle stores and alluring intellectual property – to focus on other projects. Bowker also owned a brewery, while Baldwin was preoccupied with Peet’s, the spiritual home of artisan coffee in the US. The pair agreed to sell, and alerted Schultz to a $4 million asking price.

Leaning on the expertise of accountant Ron Lawrence, hired to manage the books of Il Giornale, Schultz felt destined to buy Starbucks. However, when Sam Stroum, an original Il Giornale investor, broke off and planned his own run at Starbucks, Schultz felt undermined. Stroum had considerable clout in Seattle business circles, and Schultz was in desperate need of help as his dream hung in the balance.

Fortunately, that much-needed help arrived in the unlikely shape of Bill Gates Sr, recommended to Schultz by Greenberg, his lawyer friend. A senior partner at Greenberg’s firm, and father to the trailblazing Microsoft boss, Gates mentored Schultz through choppy waters. Allegedly, one verbal assault from Stroum left Schultz in tears, only for Gates to intervene. Gates and Schultz met Stroum, who was convinced to withdraw his Starbucks bid. Gates’ approval went a long way in Seattle, and even Stroum – a noted philanthropist – towed the line.

Fighting back, Schultz met with the remaining Il Giornale investors and gave them an opportunity to invest in his pursuit of Starbucks. A $3.8 million war chest was raised, and Schultz completed the Starbucks deal shortly after Il Giornale sales topped $500,000. Finally, on 15 August 1987, six years after he fell in love with the company, Howard Schultz owned Starbucks. He celebrated the transaction with Greenberg at Il Giornale, over a macchiato and cappuccino. A 100-page business plan sat between the lawyer and the CEO. It promised 125 Starbucks stores within five years and coffee domination down the road. Schultz drank up, then went and made it happen.

The Starbucks-Il Giornale merger

Soon after landing the Starbucks assets, Schultz hired business veteran Lawrence Maltz as an experienced executive to ease the merger with Il Giornale and subsequent expansion. Of course, an instant concern of senior leadership concerned the eventual name of that merged entity. Il Giornale was Schultz’ baby, but Starbucks had an indescribable allure that originally seduced him into the coffee business. Somewhat vexed, Schultz discussed the naming issue with his investors, then went to Terry Heckler, the graphic designer who coined the Starbucks name – borrowed from a character in Herman Melville’s Moby-Dick – 16 years earlier.

“His opinion was unequivocal,” wrote Schultz of Heckler in Pour Your Heart Into It. “The name Il Giornale, he said, is hard to write, spell and pronounce. People find it obscure. After less than two years of operation, it was too new to have widespread recognition. Italians were really the only the ones with a legitimate claim to espresso, and none of us was Italian. The name Starbucks, in contrast, has magic. It piques curiosity. Around Seattle, it already had an undeniable aura and magnetism, and thanks to mail order, it was beginning to be known across America, too. Starbucks connoted a product that was unique and mystical, yet purely American.”

In the end, their choice was clear: from a branding perspective, Starbucks had far more potential than Il Giornale. Schultz merged the companies under the umbrella of Starbucks Corporation, and Il Giornale floated into the ether. Heckler produced a revised logo that merged Starbucks’ iconic green with an updated mythological silhouette – that of the siren, a welcoming mermaid that embodied the chain’s impalpable miasma. The existing Il Giornale coffeehouses were also revamped, assuming the midnight green aesthetic of Starbucks, and with 11 stores in his possession literally overnight, Schultz began his long-awaited rollout.

Starbucks’ growth, and what happened to Il Giornale?

Starbucks met Schultz’ 150-store goal by 1992. Later that year, Starbucks went public, boasting a market capitalisation of $250 million after its initial public offering. Aside from the financial success, Starbucks also set an impressive tone on employee relations, offering full health benefits to all its people. There was no stopping Howard Schultz, who borrowed a transformative paradigm from sociologist Ray Oldenburg to make Starbucks a vital ‘third place’ for millions around the world.

Today, Starbucks has more than 35,000 stores in 80 countries on six continents. Annual revenues of $32.25 billion produce profits of $21.9 billion, making those original shareholders – those angel investors who took a chance on a funky-sounding coffee company – very rich. Schultz alone is worth $3.1 billion, according to Forbes. Not bad for an underdog kid from rough and ready Brooklyn.

And as for Il Giornale? Well, the revolutionary brand has been all but forgotten. In 2017, the first Il Giornale store – now a Starbucks, of course – was revamped, according to Starbucks Melody, with subtle nods to the original brand. If you visit that spot, in the Columbia Center, Seattle, you will find an Il Giornale logo on the wall, along with brown seats redolent of the startup and framed memorabilia charting its journey. That initial Il Giornale is certainly on my coffee bucket list, even if wider mainstream references are now few and far between.


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