Former Starbucks CEO Calls for Overhaul of US Operations Amid Disappointing Earnings Report
ICARO Media Group
In a recent LinkedIn post, former Starbucks CEO Howard Schultz has called for a revamp of the coffee chain's US operations following disappointing quarterly earnings. Schultz, who left the company's board last fall, emphasized the need for Starbucks to prioritize the customer experience and regain its merchant focus.
Schultz expressed concerns about Starbucks' lagging US sales, which resulted in a significant drop in the company's stock value by 16% in a single trading session. He pinpointed these sales as the primary reason behind Starbucks' recent decline.
One of the key recommendations made by Schultz was for Starbucks executives and board members to spend more time engaging with the baristas, encouraging them to reinvent the mobile ordering and payment platform. Schultz stressed the importance of returning to the uplifting experience the platform was originally designed to provide.
As one of Starbucks' largest shareholders, Schultz's insights carry significant weight. His departure from the board last year has not diminished his commitment to the company's success and growth.
Schultz, who successfully transformed Starbucks from a local Seattle-based coffee bean store to a global chain of European-style coffeehouses, also advocated for a revamped go-to-market strategy. He emphasized the need for a coffee-forward innovation that inspires partners, focusing on being experiential rather than transactional.
The response from Starbucks' current CEO, Laxman Narasimhan, came during a tense interview with CNBC's Jim Cramer. Narasimhan acknowledged the company's lackluster quarterly results and attributed the decline in customer visits to elevated levels of inflation. He committed to implementing an action plan to communicate the value that Starbucks offers to its customers.
Following the interview, Cramer expressed his surprise and concern over the situation, stating that he was distressed despite Narasimhan's reassurances of an action plan.
Starbucks' shares are now at a two-year low after the company adjusted its annual forecasts due to weakened demand in the inflation-affected US market and a slower-than-anticipated recovery in China. The company has revised its sales outlook for the second time this year, reporting a 15% decrease in net income and a 2% decline in revenue for the quarter.
The focus is now on Starbucks' response to the call for change from its former CEO Howard Schultz, as well as the implementation of the action plan promised by Narasimhan. Starbucks will need to address the challenges posed by inflation and find effective ways to communicate the value they offer to their customers.
The Post has reached out to Starbucks for comment on these developments, awaiting a response from the company.