Howard Schultz wants Starbucks to fix its American business

Former Starbucks CEO Howard Schultz might have left the coffee giant several months ago, but he’s still offering critiques of the company he ran for about 25 years over three stints.

Following the release of Starbucks’ dismal earnings, Schultz wrote on his LinkedIn account that he was asked by “people inside and outside the company” about his thoughts that the chain’s US operations are the “primary reason for the company’s fall from grace” and encouraged executives to spend more time with its cafe employees.

“The stores require a maniacal focus on the customer experience, through the eyes of a merchant. The answer does not lie in data, but in the stores,” Schultz wrote.

He suggested that Starbucks “reinvent” the app’s mobile ordering and payment to “once again make it the uplifting experience it was designed to be.”

He also perhaps took a slight dig at Starbucks’ current offerings — like its new lineup of spicy drinks — and said its strategy needs to be “elevated with coffee-forward innovation that inspires partners, and creates differentiation in the marketplace, reinforcing the company’s premium position.”

Schultz stepped down from Starbucks’ board of directors last September as part of a phased transition of his exit that culminated in March 2023 when he left his position of CEO for the third time. He remains one of Starbucks’ largest shareholders.

Laxman Narasimhan, Starbucks’ current CEO who Schultz helped pick, reported a “disappointing” quarter in its second-quarter earnings last week. The company experienced a decline in same-store sales for the first time since 2020 and slashed its full-year sales outlook.

Same-store sales in the United States fell 3%, a sharp reversal from the same quarter a year ago, when they grew 12%. In China, the chain’s second-largest market, sales fell a staggering 11%.

Shares of Starbucks (SBUX) are down more than 20% for the year.

Narasimhan vowed to turn the business around by including an update to its app and mobile and payment offerings, improving service times and rolling out revamped menu items to lure customers back.

Schultz, in his letter, admitted he “experienced some quarters of financial disappointment” during his tenure. He said “there must be contrition and renewed focus and discipline on the core” for any company that misses badly.

“Starbucks will recover—of that, I am certain. Starbucks created an industry that did not exist,” he said. “The brand is incredibly resilient, but it’s clearly not business as usual.”

Schultz did not mention the company’s ongoing negotiations with the Starbucks workers union or its case against the National Labor Relations Board in the Supreme Court.