Starbucks' Schultz Stepping Down as CEO to Focus on Higher-End Shops
December 01 2016 - 4:50PM
Dow Jones News
Starbucks Corp.'s Howard Schultz is stepping down as chief
executive so he can devote all of his time to a new strategic
initiative of opening high-end coffee shops for the 45-year-old
company.
Mr. Schultz, 63, is handing over the reins to President and
Chief Operating Officer Kevin Johnson, who served as a board member
of the company for several years before joining its executive team
two years ago.
Mr. Schultz will remain chairman of Starbucks and said he has no
plans to step away from the company or run for political office, as
many have speculated in the past due to his vocal stance on such
issues as veterans' rights and jobs creation.
"I don't have any time horizon that would limit my engagement in
the company," he said in an interview. "This gives me the
entrepreneurial freedom to do what I think I do best."
The move is aimed at refreshing the Starbucks brand, which has
been facing increasing competition from specialty roasters such as
Stumptown and Intelligentsia as well as from mass coffee purveyors
like Dunkin' Donuts, which has been introducing more high-end
drinks such as cold brewed coffee.
Mr. Schultz said the approach could also help protect Starbucks
from an inevitable loss of traffic from people who order more goods
online, instead of making mall trips. He decided that opening
high-end coffee shops that would provide a luxurious experience
would entice people to leave their homes.
Two years ago the company opened its first such store, the
Seattle Reserve Roastery and Tasting Room, a 15,000-square-foot
store where coffee is roasted and people can buy $12 cups of
small-batch "reserve" coffees made with a siphon brewing
technique.
Starbucks is planning to open 20 to 30 more of the high-end
stores, including one twice its size in Shanghai next year. The
company plans to build up to 1,000 smaller stores similar to the
Roastery, minus the on-site roasting, under the "Starbucks Reserve"
brand with a logo that consists of just a gold star and the letter
"R."
Starbucks is also remodeling many of its stores with
Reserve-branded coffee bars where customers can get the same kind
of coffee education and different brewing methods offered in the
Reserve stores. The company also plans to test out new drinks and
food at those stores and then introduce them in its traditional
coffee shops that don't contain Reserve bars.
Mr. Schultz has shepherded Starbucks through many changes since
he joined the coffee company in 1982 as its marketing director.
After leaving the company after a dispute with its owners, Mr.
Schultz in 1986 opened his own coffee shop, which he named Il
Giornale, and later bought the Starbucks retail unit from its
owners. He renamed his shop Starbucks and went on to expand the
brand to more than 25,000 stores across the globe.
Write to Julie Jargon at julie.jargon@wsj.com
(END) Dow Jones Newswires
December 01, 2016 16:35 ET (21:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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