Crate & Barrel founder Gordon Segal tells the story in his own words of meeting a young Howard Schultz, their longtime friendship and why he’s thrilled his family’s iconic building on Chicago’s “Magnificent Mile” is now home to the largest Starbucks in the world.
By Gordon Segal, as told to Jennifer Warnick
The story starts many years ago. In the early ’80s, Howard Schultz was a young sales rep for a Swedish housewares company called Hammarplast and he made a sales call to Crate & Barrel in Chicago. He walked in to meet our merchandising team, and I think I walked into the room and said hello to him. We knew each other from that point.
About 26 years ago, I was on my way to Japan with my daughter and went through Seattle to look at some real estate that Howard recommended for Crate & Barrel. Howard had invited us to dinner at his house and he was urging me to consider going into University Village. We got to know each other even a little bit better on that trip.
This is the part of the story where the greatest irony comes in. When we were building the Michigan Avenue building for Crate & Barrel around 1988, I was approached by two real estate brokers who came to tell me there was a new coffee concept out of Seattle looking to expand in Chicago. They wanted to know if we would lease them 2,000 square feet on the first floor of our new Crate & Barrel store for a café. And I said, “Well that's great, but no, I can't lease them 2,000 square feet because the whole first floor is only 6,000 square feet.” It wasn't until years later that I was reminded by someone about this early visit from Starbucks.
I remember that opening. The store was gorgeous, and business was nonstop from then on, it was terrific. That store made Crate & Barrel’s national reputation more than probably any other thing we had ever done. Even though we had been in business for many years, that store put us on a different level. Little did I realize then it’s almost what Starbucks is doing with the Roasteries. Today there are thousands of very good smaller Starbucks but only a few majestic Roasteries around the world that are going to educate people about coffee.
Anyway, all these years passed. I retired from Crate & Barrel [in 2008], and Howard was running Starbucks. In the spring of 2016, Crate & Barrel told me they were not going to renew their lease in the Michigan Avenue building. They have a very successful store in Lincoln Park, and it’s only three miles away. That summer, Howard and his wife, Sheri, were being honored for their charitable work at the Aspen Institute. My wife, Carole, and I went to that event with our two oldest grandchildren. During the event, Carol said, "You should go up afterwards and introduce your grandsons to Howard. You've known him for a long time, I'm sure they'd like to meet him." I said, "Good idea, Carole.” Then, just as I was about to get up, she whispered to me, "And by the way, tell him the Michigan Avenue building is going to be available." I hadn’t even thought about it, but my wife had.
So we waited until most of the crowd dissipated and I introduced my two grandsons to Howard and then I said, “By the way, I know you're doing these bigger Roasteries now. Crate & Barrel is leaving the Michigan Avenue building in Chicago, would you be interested in looking at it?” And his eyes lit up.
My wife and I had long said to ourselves that if we could not have Crate & Barrel there, we wanted something that would be very exciting and experiential that would show off the building. We were thinking of all sorts of different potential tenants, for all different kinds of uses. We made diagrams of how different stores could work in the building. Then we started talking to Starbucks, which in my mind was one of the more exciting things we could do with the building.
So, Howard came out with his team and we toured the building. It was still a Crate & Barrel at the time. We went through the whole building, and I know he was wondering if the team could make it work. We had made up a big photograph of the Crate & Barrel building, but with Starbucks Reserve Roastery name on it. We went across Michigan Avenue kitty-corner from the building. We unrolled it, and Howard looked at it, and looked at me, looked at the photograph again, and then looked out at the building. Then he said, “Okay, let's talk.” They decided to go forward and there was a very long-term negotiation because a lot of issues had to be settled out. We came to the conclusion that this was such a right decision for us and the city, that we would forego rent for the almost two years it took to construct the Roastery. We felt this partnership could be so wonderful and unique, and that is what we wanted for the space — and for the city.
When you see it, it is really remarkable. I thought our store was great when it opened in 1990 and it was beautiful and highly successful. That store helped put Crate & Barrel on the map.
But this new Roastery is really beyond my expectations. It is very beautiful, with very light colors — very Scandinavian in feeling. It is beautifully textured and has unique artwork on the stairways and on a large vertical brass panel. We put in a circular escalator, to provide a spectacular ride up to the second floor. And as you go up to the third and fourth floor, it becomes more and more exciting. I’m so very pleased with the way it turned out. It is beautiful.
So that's the story of the building, and how I knew Howard from the early days.
I'm only sorry I didn't invest in Starbucks when they went public.