Yuji Tsunoda didn't get where he is today by minding his own business. The king of green tea-flavored Frappuccinos got his job as chief executive of Starbucks Coffee Japan Ltd. by firing off a letter of complaint to Starbucks founder Howard D. Schultz in 1992. At the time, Tsunoda was working as an executive for his brother's housewares retailer in Santa Monica, Calif. He noticed that snacks and merchandise weren't selling at the local Starbucks. So he recommended more appetizing munchies and appealing tie-in goods. Within a week of sending the note, Schultz was on the phone requesting a meeting.
Four years later, when Starbucks opened in Japan--its first move outside the U.S. and Canada--it did so with Tsunoda at the helm and in partnership with his brother's company, Sazaby Inc. Since the first store began offering coffee in Tokyo's Ginza shopping district in 1996, Starbucks has grown to 365 outlets nationwide, making Japan the company's No. 2 market after the U.S. Such rapid growth confounded naysayers who doubted that Japanese, used to smoky cafes and porcelain cups, would pay a premium for lattes served in paper cups--with not an ashtray in sight.
Tsunoda, an energetic 61-year-old, raised $138 million in an initial public offering last October on Nasdaq Japan. Now comes the hard part. Rival chains are copying Starbucks by offering lattes and the like. That has begun to take its toll. In May, Starbucks Japan announced that its sales had jumped 63%, to $381 million, for the fiscal year ended Mar. 31. But pretax profit was up just 10.7%, to $13 million. Nevertheless, Tsunoda is gearing up to battle his rivals. His first step: to add unusual new items such as herb chicken pitas and rice salad wraps to the Starbucks menu. After all, Tsunoda is Starbucks' harshest critic--especially when it comes to the snacks.