In early August, Starbucks launched Starbucks Express, its boldest experiment yet, which blends java, Web technology, and faster service. At about 60 stores in the Denver area, customers can pre-order and prepay for beverages and pastries via phone or on the Starbucks Express website. They just make the call or click the mouse before arriving at the store, and their beverage will be waiting—with their name printed on the cup. The company will decide in January on a national launch.

And Starbucks is bent on even more fundamental store changes. On August , it announced expansion of a high-speed wireless Internet service to about 1,200 Starbucks locations in North America and Europe. Partners in the project—which Starbucks calls the world’s largest Wi-Fi network—include Mobile International, a wireless subsidiary of Deutsche Telecom, and Hewlett-Packard. Customers sit in a store and check e-mail, surf the Web, or download multimedia presentations without looking for connections or tripping over cords. They start with 24 hours of free wireless broadband before choosing from a variety of monthly subscription plans.

Starbucks executives hope such innovations will help surmount their toughest challenge in the home market: attracting the next generation of customers. Younger coffee drinkers already feel uncomfortable in the stores. The company knows that because it once had a group of twenty something’s hypnotized for a market study. When their defenses were down, out came the had nes. “They either can’t afford to buy coffee at Starbucks, or the only peers they see are those working behind the counter,” says Mark Braden, who conducted the research for the Hal Rainey & Partners ad agency (now part of Public’s Worldwide) insane Francisco. One of the recurring themes the hypnosis brought out was a sense that “people like me aren’t welcome here except to serve the yuppies,” he says. Then there are those who just find the whole Starbucks scene a bit pretentious. Katie Kelleher, 22, a Chicago paralegal, is put off by Starbucks’ Italian terminology of grandee and venting for coffee sizes. She goes to Dunkin’ Donuts, saying:“Small, medium, and large is fine for me.”

As it expands, Starbucks faces another big risk: that of becoming a far less special place for its employees. For a company modeled around enthusiastic service, that could have dire consequences for both image and sales. During its growth spurt of the mid-to-late-1990s, Starbucks had lowest employee turnover rate of any restaurant or fast-food company, largely thanks to its then unheard of policy of giving health insurance and modest stock options to part-timers making barely more than minimum wage

Such perks are no longer enough to keep all the workers happy. Starbucks’ pay doesn’t come close to matching the workload it requires, complain some staff. Says Carrie Shay, a former store manager in West Hollywood, Calif:“If I were making a decent living, I’d still be there.” Shay, one of the plaintiffs in the suit against the company, says she earned $ 32,000 a year to run a store with 10to 15 part-time employees. She hired employees, managed their schedules, and monitored the store’s weekly profit-and-loss statement. But she was also expected to put in significant time behind the counter and had to sign an affidavit pledging to work up to 20 hours of overtime a week without extra pay—a requirement the company has dropped since the settlement, Smith says that Starbucks offers better pay, benefits, and training than comparable companies, while it encourages promotions from within.

   For sure, employee discontent is far from the image Starbucks wants to project of relaxed workers cheerfully making cappuccinos. But perhaps it is inevitable. The business model calls for lots of low. And the more people who are hired as Starbucks expert the less they are apt to feel connected to the original mission of high service—bantering with customers and treating them like family. Robert J Thompson, a professor of popular culture at Syracuse University, says of Starbucks:“It’s turning out to be one of the great twenty-first century American success stories—complete with all the ambiguities.”

   Overseas, though, the whole with Starbucks package seems new and, to many young people, still very cool. In Vienna, where Starbucks had a gala opening for its first Austrian store last December, Helmut Spudich, a business editor for the paper Der. Standard predicted that Starbucks would attract a younger crowd than the established cafes.“The coffeehouses in Vienna are nice, but they are old. Starbucks is considered hip,” he says.

But if Starbucks can count on its youth appeal to win a welcome in new markets, such enthusiasm cannot be counted on indefinitely. In Japan, the company beat even its own bullish expectations, growing to 368 stores after opening its first in Tokyo in 1996. Affluent young Japanese women like Anna Kato, a 22-year-old Toyota Motor Corp. worker, loved the place.“I don’t care if it costs more, as long as it tastes sweet,” she says, sitting in the world’s busiest Starbucks, in Tokyo’s Shibuya district. Yet same-store sales growth has fallen in the past 10 months in Japan, Starbucks’ top foreign market, as rivals offer similar fare. Add to that the depressed economy, and Starbucks Japan seems to be losing steam. Although it forecasts a 30 percent gain in net profit, to $ 8 million, same-store sales are down 14 percent for the year ended in June. Meanwhile in England, Starbucks’ second-biggest over-seas market, with 310 stores, imitators are popping up left and right to steal market share.

Entering other big markets may be tougher yet. The French seem to be ready for Starbucks’ sweeter taste, says Philippe Bloch, cofounder of Columbus Café, a Starbucks-like chain. But he wonders if the company can profitably cope with France’s arcane regulations and generous labor benefits. And in Italy, the epicenter of European coffee culture, the notion that the locals will abandon their own 200,000 coffee bars en masse for Starbucks strikes many as ludicrous. For one, Italian coffee bars prosper by serving food as well as coffee, an area where Starbucks still struggles. Also, Italian coffee is cheaper than U.S. java and, say Italian purists, much better. Americans pay about $ 1.50 for an espresso. In northern Italy, the price is 67 cent; in the south, just 55 cents. Schultz insists that Starbucks will eventually come to Italy. It’ll have a lot to prove when it does. Carlo Perini founder of the ant globalization movement Slow Food, sniffs that Starbucks’ “substances served in Styrofoam” won’t cut it. The cups are paper, of course. But the skepticism is real.   

As Starbucks spreads out., Schultz will have to be increasingly sensitive to those cultural challenges. In December, for instance, he flew to Israel to meet with Foreign Secretary Shimon Peres and other Israeli officials to discuss the Middle East crisis. He won’t divulge the nature of his discussions. But subsequently, at a Starbucks outlets already in Kuwait, Lebanon, Oman, Qatar, and Saudi Arabia, he created a mild uproar among Palestinian supporters .Schulz quickly backpedaled, saying that his words were taken out of context and asserting that he is “pro-peace” for both sides.

There are plenty more minefields ahead. So far, the Seattle coffee company has compiled an envious record of growth. But the giddy buzz of that initial expansion is wearing off.