It was on this same date 25 years ago when the Tantocos of Rustan’s opened the country’s very first Starbucks branch in the Philippines. It was at the posh 6750 Ayala Avenue building in Makati. It marked a milestone for the country: it was the third market the biggest coffee chain in the world entered in Asia, next to Japan and Singapore.
It was 1997. Some thought it was a brave move to open a coffee chain at the height of the Asian Financial Crisis, and to open the very first branch on what others believed to be a “cursed” spot. Many businesses had previously occupied the area and did not do well, recalls Noey Tantoco Lopez, president of Rustan Coffee Corporation (RCC), exclusive licensee of Starbucks in the country.
But the family, and Lopez himself, thought otherwise. They were pretty confident the global coffee brand would perform splendidly on the site. It was a premiere business address. It was just across the Glorietta mall and to its right was the Makati Shangri-la Hotel. It was a strategic location. How could a business not flourish there?
“But, of course, the demand was [to open] multiple stores,” says Noey, a third-generation Tantoco, usually reserved, never grants interviews, but is speaking to media to mark his business’ silver anniversary.
And so it happened. The company opened the country’s first Starbucks on the morning of December 4th, attended by the president of the global brand himself, Howard Schultz. And surprise—“Nobody came,” recalls Lopez. “We thought, ‘flop!’” But the customers eventually showed up later that day and “the lines wouldn’t stop.”
It turns out positioning the very first branch in a posh but accessible spot would be a stroke of genius. Getting a Starbucks coffee would become, to use the late 90s buzzword, aspirational. It became a popular meeting place and drop-off area, peopled with office workers, ad agency creatives, society figures, party animals who needed to take a break from the action at Giraffe. Now 424 branches later, “venti,” “grande,” “frappuccino,” and “caramel macchiato” are part of many a Filipino’s everyday lexicon.
Why Starbucks said yes to the Tantocos
How did one of Manila’s premiere retail companies end up bringing the world’s largest coffee chain to the Philippines?
Lopez said it just so happened his grandfather, Rustan’s Group founder Bienvenido Tantoco, Sr., was on a business trip with Noey’s cousin Donny Tantoco in Seattle, Washington sometime in the 90s. Wanting to maximize possible opportunities during the trip, they thought they’d seek a meeting with other companies as well, not necessarily related to the department store biz. They sought an appointment with Starbucks and got one. “Starbucks loved my grandfather, they loved my cousin and the family and that’s where the partnership began,” says the RCC CEO.
In a message published in the Manila Bulletin on the occasion of his Lolo Benny’s 100th birthday last April 7, 2021, Lopez wrote: “I’ve learned two things from observing Lolo Benny on how to live a full and long life. The first is to always show up, always be present, and always be on time. I think that Lolo lives like this because the second thing I’ve learned from him is to think of others before yourself.
“Respect for the people we work with is an ongoing lesson from Lolo. To this day, Starbucks cites this as the reason they chose to partner with the Rustan Group. Lolo Benny has exemplified and continues to exemplify treating everyone with respect and dignity. Lolo respects and values the people he comes across and he thinks of them before himself.” The old man passed away three months later.
Magic in Manhattan
Lopez first stepped inside a Starbucks coffee shop a few years before they opened the 6750 branch. It was the one on 54th and Broadway across his grandmother's apartment in Manhattan. “New York City was then considered the center of the world,” recalls Lopez. “If I could paint the picture, ‘90s Manhattan was not exactly the safest place to be in. People were not very warm. Everybody was just on the go, so busy, and rude to each other.”
It was the dead of winter. Craving for coffee, he stepped inside the café and surprisingly found comfort and solace. “It was like magic,” he said, describing his first Starbucks experience. “It was like an oasis in the middle of Manhattan.” He found a comfortable spot, enjoyed his coffee while reading a book, and was surprised the staff just let him be.
Lopez says this is why they let their patrons stay at their stores for as long as they want. “People tell me, ‘You can’t let people stay there forever. You're not going to make money.’ But why would I deny [the experience that I had] to anybody else?”
Before opening Starbucks in the Philippines, Lopez and his team went on brand immersion in Seattle for six months. This allowed him to learn what the business really stood for. “It wasn’t just about serving coffee and pastries,” Lopez recalls. From the company’s legendary figures—cofounder Howard Behar and CEO Howard Schultz—the young Filipino businessman learned that one has to think of the business as “more than just a transaction. You have to make people’s lives better.” He also learned this: “Starbucks is not a coffee business, but a people business.”
Lopez describes Schultz as a force of nature. Someone who exudes power, who just makes things happen. “He’s also a good person… His words to us were, we have to do business through the lens of humanity. Meaning, we can’t just think about profit. We have to be responsible to our fellow Filipinos.”
Lopez remembers Schultz giving him one advice when they met: Don't mess up. “But he didn't use the word ‘mess,’” he says, laughing. Anyway, the words stuck. Was it a warning? One of the things that really motivated Lopez to make the company grow was the fear of disappointing people, he says, particularly those he admires and respects—which included Schultz and his lolo Benny.
Being the market leader over the past 25 years inspires Lopez and his team to stay on top of the game. “We put pressure on ourselves. The brand demands it, so we demand it from ourselves as well,” he says. Team effort and the resources and guidance from Starbucks all over the world has been a huge factor to their growth.
Lopez believes being innovative helps them stay ahead. By this, he means not only giving the customers what they want but giving them what’s bound to surprise and delight. “I think it’s part of our job to try to see around the corner and behind it.”
One of the digital innovations Lopez recently put in place is the Starbucks app, which allows customers to track their rewards sans the physical Starbucks card. They could earn stars/rewards and use whichever mode of payment they want—cash, debit card, credit card, e-wallet. They can even order via Grab or Lazada. Lopez says they are trying to make the process of getting one’s cup of brew “effortless, frictionless, and more customer centric.”
Addressing the needs of health-conscious Filipinos, the local Starbucks will also be introducing plant-based food and a lighter Frappuccino next year. Customers can also start to choose the levels of syrup for all their beverages.
Lopez shares they are targeting to open 40 to 45 more stores across the country, with a sizeable percentage in drive-thru format as these became popular during the pandemic lockdowns.
The RCC president reports that post-pandemic sales has been very encouraging. There’s a lot of competition, yes, but he says they will continue to work smart as they always have over the last 25 years. “We’re going to do it one customer at a time, one store at a time, one cup at a time.”