Howard Schultz Says Company Needs to Refocus on Coffee as Sales Struggle

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Former Starbucks CEO Howard Schultz has urged the company’s leaders to focus on coffee drinks and spend more time in stores to turn around declining sales. The Seattle-based coffee giant reported a 2% drop in revenue in the January-March period due to slowing store traffic worldwide, marking the first time since 2020 that the company saw a quarterly revenue drop. Schultz, who bought Starbucks in 1987, is credited with growing the company into a global behemoth with nearly 39,000 stores worldwide. He remains Starbucks’ largest individual shareholder, holding shares valued at $1.5 billion at the end of last year.

Schultz believes that the company’s fix needs to begin at home, with U.S. operations being the primary reason for the company’s fall from grace. Starbucks needs to focus on the customer experience through the eyes of a merchant rather than data. Starbucks’ new CEO, Laxman Narasimhan, has been working a half-day shift in stores once a month. Schultz questions Narasimhan’s turnaround plans, but he believes coffee is what differentiates Starbucks and reinforces its premium positioning.

Narasimhan announced plans for coffee pop-up stores in the U.S. and elsewhere last month, using the stores to experiment with limited-edition coffee drinks, teach younger customers about coffee, and learn about customers’ preferences. Schultz also suggests updating its mobile ordering and payment platform to make it the uplifting experience it was designed to be. Starbucks is accelerating the introduction of new digital features and personalizing the customer experience within its app.

Schultz has a history of stepping in when he sees Starbucks struggling, retiring as CEO in 2000 and becoming the company’s chairman. He stepped down again in 2017 but returned to lead the company temporarily in 2022. In 2023, he named Narasimhan, a former PepsiCo executive, as CEO.

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Source: Coffee Talk

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