Starbucks needs to refocus on coffee, former CEO says
Former Starbucks CEO Howard Schultz urged his successors to get back to basics as the company sees falling sales.
Schultz said in a LinkedIn post that leaders should focus on spending time in stores and on providing good coffee rather than other management strategies.
“At any company that misses badly, there must be contrition and renewed focus and discipline on the core. Own the shortcoming without the slightest semblance of an excuse,” he wrote.
The company’s revenue fell by two percent in the first quarter of 2024, falling under market expectations. Schultz, who stepped down as CEO last year and is no longer involved in the management of the company, told leadership that the “fix starts at home.”
“Over the past five days, I have been asked by people inside and outside the company for my thoughts on what should be done. 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 wrote. “The stores require a maniacal focus on the customer experience, through the eyes of a merchant. The answer does not lie in data, but in the stores.”
Schultz remains the company’s largest shareholder, with his stake valued at about $1.5 billion. He added that board members should be working shifts in stores and that the company should “reinvent” mobile ordering.
CEO Laxman Narasimhan announced last year that he would take shifts at local Starbucks stores at least once a month.
But Schultz said coffee is what differentiates Starbucks and reinforce the company’s premium positioning.
“The go-to-market strategy needs to be overhauled and elevated with coffee-forward innovation,” he said.
Schultz has served as CEO at the company in three separate stints, stepping in each time when the company fell behind. His most recent interim CEO role spanned from 2022 to late last year.
Starbucks shares were flat Monday. The company’s stock price has fallen more than 20% since the start of this year.
The Associated Press contributed.