A week following the release of Starbucks Corp.’s dismal quarterly results and bleak annual outlook, the company’s former CEO declared that the coffee chain must take responsibility for its errors and put in more effort to provide customers with an improved experience.
The three-time CEO of Starbucks, Howard Schultz, stated in a LinkedIn post on Sunday that the company needs “maniacal focus” to enhance its operations.
He wrote, “The company’s fall from grace is primarily due to its U.S. operations, so the fix needs to start at home.” “The stores need to have an obsessive concentration on the consumer experience as seen from the merchant’s perspective. The stores hold the solution, not the data.
Every company experiences earnings disappointments, according to Schultz, but “the miss is not what matters.” That’s what follows. What is the problem’s diagnosis? How does this affect morale? And how is it going to be fixed?
Starbucks reported sinking comparable-store sales and declining foot traffic, especially in the U.S., in its fiscal second-quarter earnings last Tuesday. Additionally, the business cut its forecast for revenue and profit this year, which caused a double-digit decline in the company’s shares on Wednesday.
During the company’s earnings call on Tuesday, Chief Executive Laxman Narasimhan stated, “Our performance this quarter was disappointing and did not meet our expectations.”
Starbucks officials, including board members, “need to spend more time with those who wear the green apron,” according to Schultz, who also stated that their main goal should be reimagining the mobile ordering and payment platform “to once again make it the uplifting experience it was designed to be.”
“Coffee-forward innovation that inspires partners and creates differentiation in the marketplace, reinforcing the company’s premium position, is needed to overhaul and elevate the go-to-market strategy,” he stated. “Be experiential, not transactional, throughout it all.”
From 1987 to 2000, from 2008 to 2017, and for a final, brief period from 2022 to early 2023, Schultz oversaw Starbucks. He no longer holds a formal position with the company and has resigned from his board seat.
In contrast to the S&P 500’s 7.5% gain this year and its fractional gain over the last five days on the SPX, Starbucks shares have dropped 17% over the last five trading sessions and are down 24% year to date.
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