Starbucks Has Lost Its Way (Again) And Founder Howard Schultz Knows Why

Company Performance - Starbucks has experienced three consecutive quarters of disappointing results, including declining same-store sales and earnings in its two most recent quarters [1] - The recent revenue misses are the first in about 15 years, since the 2007-2008 Great Recession [1] - Four percent fewer people visited Starbucks stores, and on average, the ones that did spent 3 percent less on items like mocha cappuccinos and chocolate croissants than customers in the same period a year ago [2] Market Challenges - Inflation is causing Starbucks to lose customers who no longer want to pay for high-priced coffee drinks [1] - The in-store experience has deteriorated, with increased wait times and customers abandoning online orders [1] - Starbucks has become a store that sells fancy coffees that feel like an extravagance when consumers are struggling to pay for basics like rent, mortgages, car insurance, and groceries [4] Leadership and Strategy - Howard Schultz, the founder and former CEO, has been critical of the company's current direction, stating that the brand is drifting "towards mediocrity" [3] - Schultz has no desire or intent to return as CEO, despite his historical role in rescuing the company during previous crises [3] - The company recently hired Brian Niccol, former CEO of Chipotle, to replace Laxman Narasimhan as CEO, with hopes that Niccol can turn the company around [2] Brand and Customer Experience - Schultz emphasized the importance of community and human connection in Starbucks' early success, noting that coffee was a conduit for these interactions [3] - The company's customer base has changed, and it remains to be seen if the new leadership will understand and adapt to these changes [4] - Starbucks' success was built on understanding its customers and creating a sense of community, which has been a key element of sustainable retail success [3][4]