Howard Schultz to Step Down as Starbucks CEO to Grow Premium Brand

02 Dec 2016 --- Howard Schultz, the man credited with making Starbucks a global phenomenon, is stepping down as CEO of the coffee chain to focus on Starbucks’s efforts to establish premium coffee shops. Schultz, who co-founded Starbucks, will become executive chairman of Starbucks and will now focus on building Starbuck’s high-end Reserve stores along with promoting its Roastery and Tasting Rooms as well as overseeing its corporate social responsibility (CSR) initiatives.

He is being replaced by Kevin Johnson, Starbuck’s president and chief operating officer, who will take over from April next year.

Schultz said: “To survive – let alone succeed – traditional bricks-and-mortar retailers would have to evolve their physical spaces into relevant customer destinations, as Starbucks stores have been for the last 40 years through the environments we create and the beverages and foods we serve – and create premiumized, experiential consumer venues.”

While Starbucks continues to outperform the market, its sales growth is slowing and it is facing heightened competition from mass market rivals such as Dunkin Donuts in the US as well as the likes of Costa Coffee in the UK.

Consumers are also increasingly switching to high-end, artisanal coffee houses, which is further denting sales at Starbucks.

Schultz, who is the figurehead of the Starbucks brands, has stepped down before in 2000, a period which coincided with a fall in its fortunes before returning in 2008.

Johnson said:”Over the past two decades, I have grown to know Starbucks first as a customer, then as a director on the board, and for the past two years as a member of the management team. Through that journey, I fell in love with Starbucks and I share Howard’s commitment to our mission and values and his optimism for the future.”

“We believe in using our scale for good and having positive social impact in the communities we serve around the world.”

Commenting on the ambitions of Starbucks Reserve, Schultz said it would offer the finest coffees from around the world.

He said: “Starbucks Reserve is a new, premium retail coffee format that will showcase the newest coffee-brewing methods and offer customers the finest assortment of exclusive, micro-lot coffees sourced from around the world in an all sensory experience emblematic of our Seattle Roastery, paired with artisanal food offerings developed with our partners from Italian artisanal baker Princi.”

“We expect Starbucks Reserve stores to deliver twice the unit economics of the typical Starbucks store.”

Schultz said that Starbucks planned to open at least 20 Roasteries around the world, with six by the end of 2019.

He added: “Since its opening two years ago, our Seattle Roastery has become widely recognized as the world’s most immersive, coffee-forward retail experience.”

“Executives from premier global retailers like Apple, Nike and Zara have shared with me their view that the Roastery delivers the best retail experience – in or out of coffee – that they have ever encountered. Our Roastery is attracting customers and visitors to Seattle alike, and casting a bright halo across the entire Starbucks global brand and ecosystem.”