Howard Schultz Looks up to Starbucks to Transform its American Business

Howard Schultz
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Even after he departed the massive coffee chain a few months ago, former Starbucks CEO Howard Schultz continues to criticize the business that he oversaw for over 25 years throughout three different tenures. Schultz encouraged executives to spend more time with their cafe employees after the company’s dismal earnings were revealed. He wrote on his LinkedIn account that he was questioned by “people inside and outside the company” about his belief that the US operations of the chain are the “primary reason for the company’s fall from grace.” “The stores must have an obsessive concentration on the consumer experience as seen from the perspective of a retailer. The stores hold the answer, not the data,” wrote Schultz.

He recommended that in order to “once again make it the uplifting experience it was intended to be,” Starbucks “reinvent” the mobile ordering and payment features of the app.
He added that Starbucks’ approach needed to be “elevated with coffee-forward innovation that inspires partners, creates differentiation in the marketplace, reinforcing the company’s premium position.” This may have been a subtle jab at the company’s current products, such as its new selection of spicy drinks.
In September of last year, Schultz announced his resignation from the Starbucks board of directors. This was the first stage in a gradual departure that would ultimately see him step down as CEO for the third time in March 2023. He is still among Starbucks’ biggest stockholders.

Starbucks’ current CEO, Laxman Narasimhan, whom Schultz assisted in selecting, announced last week’s second-quarter earnings as “disappointing.” For the first time since 2020, same-store sales declined for the business, which resulted in a reduction in its sales projection for the entire year.
In contrast to the same quarter last year, when they increased by 12%, same-store sales in the US decreased by 3%. Sales in China, the second-biggest market for the chain, dropped by an astounding 11%. Over 20% of Starbucks’ (SBUX) shares have decreased this year.
In order to get customers back, Narasimhan promised to improve service times, introduce new menu items, and enhance the company’s app, mobile, and payment options.

In his letter, Schultz acknowledged that throughout his employment, he “had some quarters of financial disappointment.” For each business that makes a significant mistake, he stated, “there must be contrition and renewed focus and discipline on the core.”

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