Former Starbucks CEO Howard Schultz recently offered critiques of the company he led for 25 years following the release of Starbucks’ disappointing earnings. In a LinkedIn post, Schultz suggested that Starbucks’ US operations were the primary reason for the company’s struggles and urged executives to spend more time with cafe employees. He emphasized the need for a strong focus on the customer experience in stores and recommended reinventing the app’s mobile ordering and payment system.
Schultz also called for a coffee-forward innovation strategy to differentiate Starbucks in the marketplace and elevate the brand’s premium position. He stepped down from Starbucks’ board of directors in September as part of a phased exit that concluded in March 2023. Despite leaving his position as CEO, Schultz remains one of the company’s largest shareholders. Starbucks’ current CEO Laxman Narasimhan reported a disappointing quarter with declining same-store sales in the US and China, leading to a lowered full-year sales outlook.
In the United States, same-store sales declined by 3%, marking a sharp contrast to the previous year when they increased by 12%. In China, Starbucks’ second-largest market, sales fell by 11%. The company’s stock has dropped by more than 20% for the year, prompting Narasimhan to commit to turning the business around through updates to the app, improved service times, and new menu items. Schultz acknowledged experiencing periods of financial disappointment during his tenure and emphasized the importance of contrition, focus, and discipline for any company facing challenges.
While Schultz expressed confidence in Starbucks’ ability to recover and its resilient brand, he acknowledged that it was not business as usual for the company. He did not address the ongoing negotiations with the Starbucks workers union or the case against the National Labor Relations Board in the Supreme Court. As Starbucks works to regain its footing in the wake of declining sales and market challenges, Schultz’s insights serve as a reminder of the importance of customer experience, innovation, and resilience in navigating difficult times for any business.