Former Starbucks CEO Schultz says company needs to refocus on coffee as sales struggle

Former Starbucks CEO Howard Schultz says the company’s leaders should spend more time in stores and focus on coffee drinks as they work to turn around flagging sales. In a LinkedIn post, Schultz said many people had reached out to him after Starbucks reported weaker-than-expected quarterly sales and earnings. The Seattle coffee giant said revenue dropped 2% in the January-March period as store traffic slowed around the world. It was the first time since 2020 that the company saw a drop in quarterly revenue. Starbucks also lowered its sales and earnings guidance for its full fiscal year. Schultz, who bought Starbucks in 1987, is credited with growing the company into the global behemoth it has become with nearly 39,000 stores worldwide. He has been the chairman emeritus of the company since last fall when he stepped down from Starbucks’ board. In his post, Schultz said senior leaders—including board members—need to spend more time talking to baristas in the company’s stores. “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,” he said. Laxman Narasimhan, who became Starbucks’ CEO last spring, has been working a half-day shift in Starbucks stores once a month. At some points in his post, Schultz seemed to be questioning Narasimhan’s turnaround plans. In a conference call with investors, Narasimhan mentioned several new products he thinks will drive customers to stores later this year, including boba drinks, sugar-free options, and the brand’s first energy beverage. But Schultz said coffee is what differentiates Starbucks and reinforces the company’s premium positioning. Narasimhan did announce plans for coffee pop-up stores in the U.S. and elsewhere last month. Starbucks plans to use the stores to experiment with limited-edition coffee drinks, teach younger customers about coffee, and learn about customers’ preferences. Schultz also said the company should update its mobile ordering and payment platform to “once again make it the uplifting experience it was designed to be.” Narasimhan said last fall that Starbucks is accelerating the introduction of new digital features and trying to personalize the customer experience within its app. This article was provided by The Associated Press.