Former Starbucks Corp. Chief Executive Howard Schultz urged the coffee chain to own its shortcomings and fix operations following its biggest sales miss in years.
“At any company that misses badly, there must be contrition and renewed focus and discipline on the core,” he wrote in a post on LinkedIn on Sunday. “Own the shortcoming without the slightest semblance of an excuse.”
Shares plummeted after sales dropped this month for the first time since the early days of Covid in 2020. Seattle-based Starbucks, which has struggled to lure budget-conscious consumers as inflation persists, said chilly January temperatures that slowed store visits and the conflict in the Middle East hurt quarterly results.
Senior leaders need to reinvent the mobile ordering and payment platform, Schultz said. The chain has been looking to turn around its performance through initiatives like cutting wait times, fulfilling morning demand and getting more customers to try its app. A boba tea-like drink will be launched this summer.
“The go-to-market strategy needs to be overhauled and elevated with coffee-forward innovation that inspires partners, and creates differentiation in the marketplace, reinforcing the company’s premium position,” he wrote. “Through it all, focus on being experiential, not transactional.”
Starbucks has faced additional pressure in China, the second-most populous country in the world. Local rival Luckin Coffee Inc. Became the country’s dominant coffee chain last year — the first time it’s surpassed Starbucks in annual sales there. While Starbucks reported a 4% decline in same-store sales in the latest quarter, they tumbled 11% in China.
Schultz, who stepped down from his third stint as CEO in 2023, remains Starbucks’ fifth-largest shareholder, and single largest individual shareholder. He wrote that he was “confident” the company’s China business would return to health and become its biggest market.
“Starbucks will recover — of that, I am certain,” he said. “The brand is incredibly resilient, but it’s clearly not business as usual.”
Shares in the company rose by 1% in premarket trading on Monday. The stock is down 30% in the last year, compared to a 26% rise in the S&P 500.