Howard Schultz wants Starbucks to improve its American business

Howard Schultz wants Starbucks to improve its American business

Former Starbucks CEO Howard Schultz may have left the coffee giant a few months ago, but he’s still offering criticism of the company he ran for about 25 years during three stints.

Following Starbucks’ dismal earnings release, Schultz wrote on his LinkedIn account that he was asked by “people inside and outside the company” about his thoughts that the US chain’s operations were “the main reason for the company’s fall from grace” and encouraged executives to spend more time with employees. the cafe.

“Stores need a crazy focus on the customer experience, through the eyes of a merchant. The answer lies not in the data, but in the store,” Schultz wrote.

He suggested that Starbucks “reinvent” its mobile ordering and payment app to “once again make it the delightful experience it was designed to be.”

He may also see little of Starbucks’ current offerings — such as its new line of spicy drinks — and says its strategy needs to be “enhanced with forward-looking innovation that inspires partners, and creates differentiation in the market, strengthening the company’s premium position.”

Schultz resigned from the Starbucks board last September as part of a phased transition of his departure that culminates in March 2023 when he steps down as CEO for a third time. He remains one of Starbucks’ largest shareholders.

Laxman Narasimhan, the current CEO of Starbucks who was helped by Schultz, reported a “disappointing” quarter in second-quarter earnings last week. The company experienced a decline in same-store sales for the first time since 2020 and cut its full-year sales outlook.
Same-store sales in the United States fell 3%, a sharp change from the same quarter last year, when they grew 12%. In China, the chain’s second-biggest market, sales fell 11%.

Shares of Starbucks (SBUX) are down more than 20% for the year.

Narasimhan vowed to turn the business around by including updates to its mobile and payment apps and offerings, improving service times and rolling out revamped menu items to lure customers back.

Schultz, in his letter, acknowledged he “experienced several financial disappointments” during his tenure. He said “there must be remorse and renewed focus and discipline at the core” of any company that misses badly.

“Starbucks will recover—of that, I’m sure. Starbucks created an industry that didn’t exist,” he said. “The brand is very resilient, but it’s clearly not business as usual.”

Schultz did not mention the company’s ongoing negotiations with Starbucks’ union or its case against the National Labor Relations Board at the Supreme Court.