Starbucks customers are fed up with high prices and painfully slow service – the coffee chain admits it has lost tens of millions of visitors this year.
It seems former CEO Howard Schultz, who spent nearly four decades building Starbucks into the world’s largest coffee chain, has had enough, too.
The billionaire, who left last year, said Sunday that the network’s new bosses should stop making excuses. He wants them to spend more time in the stores to see what customers want and also focus on the coffee.
Instead, current boss Laxman Narasimhan is pinning his hopes on quirky, non-coffee offerings like boba drinks, sugar-free options and the brand’s first energy drink.
One thing everyone agrees on, including Schultz, Narasimhan and fed-up customers, is that Starbucks needs to address long waits for coffee.
One thing the current CEO and the previous one don’t seem to want to talk about are the sky-high prices: standard coffees like lattes cost more than $6.
Starbucks founder and former CEO Howard Schultz says company leaders should spend more time in stores and focus on coffee drinks as they work to reverse declining sales.
Statbucks CEO Laxman Narasimhan said slow service was turning off customers
Starbucks Customers Are Abandoning Orders While Waiting in Line Because It’s Taking Too Long
“In any enterprise that fails badly, there must be repentance and a renewed focus and discipline on the fundamentals,” he wrote in a LinkedIn post on Sunday.
‘Acknowledge the defect without the slightest appearance of excuse.’
In his post, Schultz said that senior managers, including board members, need to spend more time talking to baristas in the company’s stores.
“I have emphasized that the company’s solution must begin at home: the US operations are the main reason for the company’s fall from grace,” he said.
‘Stores require a manic focus on the customer experience, through the eyes of a merchant. The answer is not in the data, but in the stores.’
At some points in his post, Schultz appeared to be questioning Narasimhan’s recovery plans.
On a conference call with investors last week, Narasimhan mentioned several new products that he believes will bring customers to stores later this year, including boba drinks, sugar-free options and the brand’s first energy drink.
But Schultz said coffee is what sets Starbucks apart and reinforces the company’s premium positioning.
“The marketing strategy must be reviewed and improved with coffee-oriented innovation,” he stated.
Shultz was not actually the founder of Starbucks. But he bought it from its previous owners in 1987, when it only had 17 stores, and turned it into the largest coffee chain in the world.
In the LinkedIn post published Sunday, Schultz said many people had reached out to him after Starbucks reported disastrous earnings for the January-March period last week.
Starbucks, which has about 17,000 stores in North America, saw a drop in sales for the first time since the height of the pandemic, as tens of millions of customers stopped going to its coffee shops.
Only in November were record revenues recorded.
Current CEO Laxman Narasimhan offered a long list of excuses for the huge drop in customers.
Americans continuing to tighten their belts, bad weather, and boycotts by pro-Palestinian supporters all played a role.
Narasimhan also said the chain’s infamously slow service, which caused one in seven mobile orders to be abandoned, was a major factor. Narasimhan said Starbucks would continue to see slow sales in the spring and summer.
Commentators mocked him for suggesting the answer lay in strange drinks like new lavender-infused teas.
It wasn’t what Shultz wanted to hear, nor did investors like it: the stock plummeted.
Howard Schultz, left, speaks while still interim CEO of Starbucks after introducing incoming CEO Laxman Narasimhan during a 2022 investor day in Seattle.
Schultz wants current Starbucks bosses to refocus on coffee and not fancy drinks
Starbucks, in the first three months of the year, has lost millions of customers
Schultz, who bought Starbucks in 1987, is credited with turning the company into the global giant it has become, with nearly 39,000 stores worldwide.
Schultz, who resigned from the board last fall, remains Starbucks’ largest individual shareholder, owning shares valued at $1.5 billion at the end of last year.
But Schultz said coffee is what sets Starbucks apart and reinforces the company’s premium positioning.
“The marketing strategy must be reviewed and improved with coffee-oriented innovation,” he stated.
Narasimhan announced plans to open pop-up coffee shops in the United States 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 customer 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.”
He did not specify what changes he thinks should be made.
On Monday, Starbucks said in a statement: “We always appreciate Howard’s perspective. The challenges and opportunities he highlights are what we are focused on. And like Howard, we are confident in the long-term success of Starbucks.”
On TikTok, mikeylorenz0 complained that for a black coffee he has to “wait 20 minutes” while others order a “venti grande iced sugar candy marshmallow ugat.” He called for an express line for people who just want basic drinks like a black coffee or a latte without modifications.
Schultz has a history of stepping in when he sees Starbucks struggling. He retired as CEO in 2000 and became president of the company, then returned as CEO in 2008, as the company faced the recession.
Schultz resigned again in 2017, but returned to run the company temporarily in 2022.
In 2023, it named Narasimhan, a former PepsiCo executive, CEO. Schultz became chairman emeritus when he left the board.
Starbucks shares were flat on Monday. The company’s share price has fallen more than 20 percent since the beginning of this year.
