Starbucks Ex-CEO Urges Leaders to Return to Stores

Starbucks’ former CEO said the chain’s leaders need to spend more time at its stores.

Howard Schultz made the argument on LinkedIn Sunday (May 5), days after the company reported its steepest drop in U.S. customer traffic in 14 years.

To combat that problem, Schultz said, Starbucks’ leadership needs to focus on its stores, which he said require “maniacal focus on the customer experience.”

“Senior leaders — including board members — need to spend more time with those who wear the green apron,” Schultz wrote, referring to the uniforms worn by Starbucks’ rank-and-file workers. “One of their first actions should be to reinvent the mobile ordering and payment platform — which Starbucks pioneered — to once again make it the uplifting experience it was designed to be.”

Schultz, who served three terms as Starbucks’ CEO and remains its largest individual shareholder, also called for an overhaul of the company’s go-to-market strategy “with coffee-forward innovation that inspires partners and creates differentiation in the marketplace.”

Starbucks last week released earnings showing a 1% year-over-year decline in revenue, with store sales falling 4%, driven largely by negative growth in North America and China.

The company attributed its decline to factors that include a tough macroeconomic environment, slower-than-expected growth in China (its biggest market aside from the U.S.), severe weather, and ongoing caution among consumers.

“The remainder of our challenges were attributable to fewer visits from our more occasional customers,” Starbucks CEO Laxman Narasimhan said on an earnings call.

The chain’s troubles are part of a broader trend of consumers avoiding fast-food eateries amid climbing prices.

Fast-food traffic in the U.S. dropped 3.5% year over year in the first quarter of 2024, while prices at these restaurants were 33% higher in March than 2019 levels.

In addition to Starbucks, Yum Brands, owner of several chains, reported its own decline in sales last week, with Pizza Hut and KFC falling a respective 7% and 2%.

“This pattern underscores broader trends affecting the fast-food industry, including fluctuating consumer spending habits,” PYMNTS wrote May 1. “The decrease in sales at Pizza Hut and KFC could be linked to a general reduction in discretionary spending, a sentiment echoed across the sector, including by peers like McDonald’s.”