What should Starbucks’s new CEO’s priorities be?
Starbucks announced plans to hire retail and restaurant industry outsider Laxman Narasimhan as its next CEO, replacing three-time CEO, Howard Schultz, as the chain embarks on a “Reinvention.”
Mr. Narasimhan, CEO of British CPG giant Reckitt Benckiser Group for the past three years, will join Starbucks in October and take over as CEO next April.
At Lysol and Durex owner Reckitt, Mr. Narasimhan earned praise for orchestrating a successful restructuring, quickly cutting costs, selling underwhelming brands and realigning the business for growth. Previously, he was global chief commercial officer at PepsiCo and had overseen its Latin America and Europe regions. He began his career as a McKinsey partner. Mr. Schultz told The New York Times’ DealBook, “He’s a true operator and has the DNA of an entrepreneur.”
Mr. Schultz, who returned as interim CEO earlier this year, will continue in that role and then remain “closely involved with the company’s Reinvention” as an advisor.
The Reinvention will be expanded upon at Starbucks’ Investor Day on Sept. 13, but it incorporates five key pillars:
- Revamping the execution of Starbucks’ brand mission;
- Improving employee welfare;
- Ensuring the store experience is “planet positive”;
- Creating personalized customer experiences;
- Redesigning “partnership”.
A priority will be revamping Starbucks’ culture as more than 200 U.S. stores have voted to unionize since late last year and turnover has significantly increased. With drive-thru and mobile orders accounting for 70 percent of Starbucks’ sales nationwide, the company is investing in equipment and procedures to improve speed, not only to reduce wait times — a primary customer complaint — but stress on staff. Beyond labor, commodity inflation remains a challenge.
Mr. Schultz also envisions Starbucks extending as a “digital third place” into the metaverse to help drive loyalty.
Wall Street was generally positive on the hire. While lacking restaurant expertise, Mr. Narasimhan’s experience at global consumer product companies is expected to translate well to Starbucks, along with his work improving Reckitt’s operations and business. Goldman Sachs’ Jarded Garber said in a note, “His experience at several consumer companies, broad geographical knowledge base and, importantly, a cultural fit with SBUX’s purpose-driven mission, per management, should set him up well to succeed.”
- Starbucks Names Laxman Narasimhan as Next Chief Executive Officer – Starbucks
- Meet Starbucks’s New Chief Executive – NY Times
- A message from Howard Schultz: The next chapter of Starbucks Reinvention – Starbucks
- Starbucks says Laxman Narasimhan will succeed Howard Schultz as CEO – Los Angeles Times
- Starbucks: Analysts Generally Positive on New CEO, See Upcoming Investor Day as ‘Next Big Catalyst’ – Investing.com
- Starbucks CEO transition plan gets muted reaction from Wall Street – CNBC
- 5 things to know about new Starbucks CEO Laxman Narasimhan – CBS News
- New Starbucks CEO Lacks Retail Expertise, But This Analyst Is Bullish: Here’s Why – Business Insider
- The new CEO at Starbucks is given high marks by analysts – Seeking Alpha
- Is closing stores the best solution to Starbucks’ safety concerns? – RetailWire
- Can Starbucks replicate the ‘third place’ in the metaverse? – RetailWire
DISCUSSION QUESTIONS: What do you think of the outside hire of Laxman Narasimhan as Starbucks’s CEO? What do you see as the biggest challenges and opportunities ahead for Starbucks?