Former Starbucks CEO Howard Schultz urged his successors to get back to basics in the face of declining sales.
Schulz mentioned in a LinkedIn post This means that leaders should spend their time in the store and focus on serving great coffee, rather than other business strategies.
“Companies that have made major failures must reflect and have a new focus and discipline at their core. Admit your shortcomings without the slightest excuse,” he wrote.
The company’s sales for the first quarter of 2024 decreased by 2%, lower than market expectations. Schultz, who stepped down as CEO last year and is no longer involved in management, told executives that “solving the problem starts at home.”
“For the past five days, I have been asked both internally and externally to think about what to do. I have been emphasizing that the company’s turnaround needs to start at home: the U.S. operations are the main reason for the company’s downfall. ” he wrote. “In stores, we need to radically focus on the customer experience, through the eyes of the seller. The answer lies in the store, not in the data.”
Schultz remains the company’s largest shareholder, with his stake valued at about $1.5 billion. He added that board members should work shifts in stores and that the company should “reinvent” mobile ordering.
CEO Laxman Narasimhan announced last year that he would work at least one shift a month at a local Starbucks store.
But Schultz said coffee is what differentiates Starbucks and strengthens the company’s premium position.
“We need to thoroughly review our market development strategy and enhance it with coffee-forward innovation,” he said.
Mr. Schultz has served as CEO of the company three times, and each time he has served as CEO when the company has fallen behind. His most recent interim CEO position was from 2022 until the end of last year.
Starbucks stock was flat on Monday. The company’s stock price has fallen more than 20% since the beginning of this year.
The Associated Press contributed.
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