Shares of the coffee chain surged in late trading on Friday after activist investor Elliott Investment Management reportedly has a sizable position in Starbucks.
Elliott is reportedly pressuring Starbucks, which has been criticized for its long wait times, to find new ways to boost its stock price. The Wall Street Journal was first to report Elliott’s stake.
Shares of the Seattle-based coffee giant rose nearly 7% to $79.27 on the news, but the company’s shares are still down 23% over the past year.
Elliott has a history of turning around troubled companies, having recently forced restructurings at companies including Southwest Airlines Inc. and software company Salesforce.
“We do not comment on rumors or speculation,” a Starbucks spokesperson told The Post in a statement.
Elliott declined to comment.
Shares of Starbucks, the world’s largest coffee chain by store count and sales, took a hit in April after the company reported its first same-store sales decline in nearly three years.
CEO Lakshman Narasimhan, who takes over from longtime executive Howard Schultz in March 2023, has faced criticism from his predecessor over how he has run the company.
Narasimhan has been forced to cut profit forecasts multiple times since taking over as CEO, and Starbucks’ market capitalization has plummeted from about $115 billion under Schultz’s stewardship to $89 billion as of Friday.
In a LinkedIn post in May, Schultz criticized his successor’s business strategy and even offered advice about how the company could move forward.
A major complaint from Starbucks customers is the long wait times in the morning, with some frustrated customers waiting up to 40 minutes for a cup of coffee.
To combat the queues, Starbucks changed some of its operating policies: Previously, Starbucks baristas prioritized cold drink orders over hot drink orders, regardless of which order was placed first, but this proved to slow down waiting customers.
The coffee chain has started using employees as “play callers,” who step away from making drinks when stores are especially busy to help with the extra tasks needed to prevent congestion.
Starbucks is trying to attract new customers by offering special discounts and expanded menu options to app users.
News that Elliott is pushing for reforms comes just months after a coalition of labor unions ended a fight at Starbucks’ board of directors after the company agreed to work toward a collective bargaining agreement.
Starbucks employees have been working to form a union since 2021, demanding better wages and working conditions.
The Strategic Organizing Center (SOC), a North American labor union coalition, had called on investors to nominate three of its director candidates to Starbucks’ 11-member board of directors.
The fight was closely watched on Wall Street because it marked the first time a union had used a tactic traditionally used by hedge funds to challenge a company’s board seats.
With post wire
