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Former Starbucks CEO Howard Schultz has some words of wisdom for the coffee giant after its disappointing second-quarter earnings report.
The company saw U.S. same-store sales drop 3% last quarter, with traffic to its shops falling 7%. It was the second consecutive quarter of laggard sales in its home country. In the prior quarter, executives had pointed to “misperceptions” about the coffee chain’s stance on the Israel-Hamas war for weak sales.
While its sales foundered worldwide in the most recent quarter, Schultz said the remedy has to start with its home market.
“U.S. operations are the primary reason for the company’s fall from grace,” Schultz wrote in a post on LinkedIn on Sunday. “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.”
Starbucks has begun rolling out new stores with enhanced features, including dampening baffles in its ceilings to diminish background noise and echos. These improvements, the company hopes, will improve the cafe experience for customers as it seeks to add 650 new U.S. stores during this fiscal year.
Read more: Starbucks promised a ‘Triple Shot’ China expansion. It isn’t working
But executives need to do more, Schultz said. He encouraged senior leaders, including members of the company’s board of directors, “to spend more time with those who wear the green apron.”
The former Starbucks CEO, who served three stints in the position before stepping down one last time in March 2023, said the company has to reinvent its mobile ordering and payments platform “to once again make it the uplifting experience it was designed to be.”
During his final stint as CEO, Schultz became widely known as a definitive force against unionization efforts among the chain’s baristas. Starbucks has faced several accusations of union-busting tactics.
“The go-to-market strategy needs to be overhauled and elevated with coffee-forward innovation that inspires partners, and creates differentiation in the marketplace, reinforcing the company’s premium position,” Schultz said. “Through it all, focus on being experiential, not transactional.”
It’s not all doom and gloom, however. Schultz said the Starbucks brand, which pioneered the coffee space and became one of the most “recognized and respected in the world,” is “incredibly resilient, but it’s clearly not business as usual.”
“Starbucks will recover—of that, I am certain,” he wrote.