Former Starbucks CEO and founder Howard Schultz believes the company’s leaders should spend more time in stores and focus on coffee drinks as they attempt to revive declining sales.
In a LinkedIn article published over the weekend, Schultz stated that many people had contacted him after Starbucks reported lower-than-expected quarterly sales and earnings last week.
The Seattle coffee company reported a 2% reduction in income from January to March as global shop traffic slowed. The company’s quarterly revenue decreased for the first time since 2020. Starbucks also reduced its full-year sales and earnings projections.
Starbucks Founder Schultz Says Company Needs To Refocus On Coffee As Sales Struggle
Schultz, who purchased Starbucks in 1987, is credited with transforming the firm into the global juggernaut it is today, with roughly 39,000 locations globally. He has been the company’s chairman emeritus since last October when he stepped down from Starbucks’ board.
Schultz remains Starbucks’ largest individual stakeholder, with shares worth $1.5 billion at the end of last year.
In his post, Schultz stated that senior executives, including board members, should spend more time chatting with baristas in the company’s stores.
“I have emphasized that the company’s fix needs to begin at home: U.S. operations are the primary reason for the company’s fall from grace,” he stated. “The stores require an obsessive concentration on the client experience, as seen through the perspective of a merchant. The answer is not found in statistics, but in stores.”
Since last spring, Laxman Narasimhan, Starbucks’ CEO, has worked a half-day shift in Starbucks outlets once a month.
Schultz appeared to challenge Narasimhan’s turnaround plans at times throughout his post. During a conference call with investors last week, Narasimhan noted several new products that he believes will drive people into stores later this year, including boba drinks, sugar-free alternatives, and the brand’s first energy drink.
Starbucks Founder Schultz Says Company Needs To Refocus On Coffee As Sales Struggle
However, Schultz stated that coffee distinguishes Starbucks and reinforces the company’s premium position.
“The go-to-market strategy needs to be overhauled and elevated with coffee-forward innovation,” he said.
Schultz also stated that the company’s mobile ordering and payment infrastructure should be updated to “once again make it the uplifting experience it was designed to be.” He did not indicate what modifications he believes should be made. Last autumn, Narasimhan stated that Starbucks is accelerating the rollout of new digital capabilities and attempting to customize the user experience via its app.
A message seeking a response to Schultz’s post was placed with Starbucks on Monday.
Starbucks Founder Schultz Says Company Needs To Refocus On Coffee As Sales Struggle
Schultz has a habit of stepping in when he notices Starbucks faltering. He retired as CEO in 2000 and became the company’s chairman before returning as CEO in 2008, during the recession.
Schultz stood down again in 2017 but will return to manage the corporation on a temporary basis beginning in 2022. In 2023, he appointed Narasimhan, a former PepsiCo executive, as CEO. Schultz stepped down from Starbucks’ board last October and became chairman emeritus.
SOURCE – (AP)
