The new boss is different than the old boss at Starbucks
Leaders with the vision of Howard Schultz are few and far between in retailing. It’s clear, by his own admission, that Kevin Johnson is no Howard Schultz. Whether the current CEO of Starbucks would benefit from being more like his predecessor remains to be seen, but for now he believes that his way is the best way forward for the company.
The Wall Street Journal reported on one apparent contrast between Messrs. Johnson and Schultz. While Mr. Schultz envisioned a future in which Starbucks would operate 1,000 upscale Reserve cafes and 30 Roastery concept stores, Mr. Johnson is pumping, if not slamming, the brakes on the idea. Instead, he has called the 1,000 locations figure “aspirational” and is only committing to test six to 10 Reserve stores to determine if they will support building more.
Reserve locations are decidedly different than the typical Starbucks. Their open floorplans feature a Princi bakery, a liquor counter and coffee bars offering high-end beans and drinks. While the seating approach is communal, the service focuses on a custom approach.
Analysts and investors have been getting fidgety over Starbucks’ results, CNBC reports, as its comparable store sales growth has fallen off. For 2018, the chain reported gains of two percent for the first two quarters, three percent in the third and four percent in the fourth. While the numbers show an upward trend, analysis indicates that gains have come as the result of higher prices at the chain while traffic is not growing as quickly. On the positive side, customers who visited Starbucks in the fourth quarter spent more time on the premises than in the past.
One saving grace for Mr. Johnson, who became CEO in April 2017, is that the share price of Starbucks is up seven percent over the past year. That has given him cover to pursue his agenda without facing opposition from investors who may be longing for a return to the days of big growth under Mr. Schultz.
- Starbucks CEO Kevin Johnson Reins In Predecessor’s Ambitions: ‘I’m Not Howard’ – The Wall Street Journal
- How Starbucks went from a single coffee bean store to an $80 billion business – CNBC
- Starbucks shares soar 10% as coffee drinkers drive record revenue – CNBC
DISCUSSION QUESTIONS: Is it cause for concern that Kevin Johnson doesn’t appear to share the same vision for Starbucks as Howard Schultz? Is Mr. Johnson’s approach what Starbucks needs at this point in its history?