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Friday, February 6, 1998 - Page updated at 12:00 AM

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Starbucks Brews Big Magic For Inner-City Plans -- Coffee Roaster, Johnson Team Up

Seattle Times Business Reporter

Retired Los Angeles Lakers superstar Earvin "Magic" Johnson is accustomed to fans rushing up to him for his autograph because of his basketball exploits. Now he's hoping Starbucks Coffee shareholders will rush up to thank him for his business exploits.

"My goal is to be on that video next year!" Johnson told shareholders yesterday after watching taped highlights of Starbucks 1997 fiscal year. The audience in Seattle's Paramount Theater roared its approval.

Johnson and Starbucks Chairman Howard Schultz said their two companies are teaming up to develop Starbucks stores in inner-city neighborhoods across the U.S. The first is scheduled to open this spring in the Ladera Shopping Center in Culver City outside Los Angeles.

"The people are truly excited," Johnson said of the reaction he's heard from African-American, Asian-American and Latino residents in the area. "We really want the best. Now we have the opportunity to have the best in our community."

Schultz said Starbucks and Johnson's company, Johnson Development, would be 50-50 partners in the stores. Starbucks will operate the stores, and the two companies will split the profits. Schultz and Johnson did not say how many stores they plan to open together, but Schultz said Starbucks wanted to have stores in African-American, Hispanic and Asian-American communities throughout the United States.

Wanda Herndon, Starbucks' senior vice president for communications and public affairs, said Starbucks could have gone ahead and developed stores in minority neighborhoods on its own, as it has in Seattle's Central District and Rainier Valley. But a partnership with Johnson will accelerate the process, she said.

"Johnson Development has an intimate knowledge and understanding of these communities," she said. Johnson, who led the Lakers to five National Basketball Championships in the 1980s, is a source of hope for many individuals in those neighborhoods, she added.

Schultz said the stores will carry the Starbucks name but have some kind of visual presence inside, still undefined, indicating that Johnson is associated with the store. The stores will not be franchised. Starbucks still intends to grow through opening stores it owns, said Schultz.

Herndon said Starbucks and Johnson Development will jointly award construction contracts. Johnson Development knows local real-estate markets and has a track record of hiring minority contractors, Herndon noted.

At yesterday's annual meeting, Schultz said the Seattle-based specialty coffee retailer and roaster will be selling its whole and ground beans in supermarkets in 10 U.S. cities beginning April 14.

The cities include Seattle, Portland, Spokane, Los Angeles, San Francisco, Denver, Salt Lake City, Phoenix, Albuquerque and Billings, Mont. It also will continue to sell beans in Chicago-area supermarkets, where it has been test-marketing the concept.

Schultz did not say which local supermarkets will carry Starbucks beans, but he said he thought most would.

Orin Smith, Starbucks' president and chief operating officer, yesterday said Starbucks would reopen its store in the Georgetown neighborhood of Washington, D.C., as a living memorial to three employees who were murdered there last July.

He said Starbucks would donate all future profit from the store to an anti-violence and victim-rights organization in the nation's capital. The company continues to offer a $100,000 reward for information leading to the arrest and conviction of whoever killed the three workers.

The store will reopen Feb. 20, said Smith.

In another matter, Schultz and Smith said the company would defend itself against allegations by a former Starbucks employee that she was sexually harassed.

A 37-year-old woman who worked as a manager in Starbucks' corporate office said she was repeatedly fondled by her supervisor. According to the complaint filed in King County Superior Court, the woman, Rebecca Hom, was demoted after she complained of the supervisor's behavior. Hom left the company in January.

Schultz and Smith said the company hired an independent investigator who found no basis for the allegations.

Information from Seattle Times business reporter Alex Fryer is included in this report.

Lee Moriwaki's phone message number is 206-464-2320. His e-mail address is: lmor-new@seatimes.com

Copyright (c) 1998 Seattle Times Company, All Rights Reserved.

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