The Strategist

Starbucks CEO Howard Schultz goes on a new adventure

12/02/2016 - 14:40

Starbucks’ CEO Howard Schultz resigns. He is going to create a chain of premium coffee shops, where coffee will be fried on the spot, and a cup of coffee will cost $ 12. Starbucks now has to fight for its place under the sun with premium coffee houses and mass brands. Kevin Johnson will take the lead after Mr. Schultz.

N i c o l a via flickr
N i c o l a via flickr
On Thursday, the company announced departure of Howard Schultz, CEO of American coffee chain Starbucks, from his post. Current President and Operating director of the company Kevin Johnson will become new CEO. Mr. Schultz will leave his post April 3, 2017 to head Starbucks’ board of directors. In addition, he is going to create high-end coffee shops within the company. Previously, Starbucks has launched a new project with aim to enter the premium coffee market. New coffee shops, called Reserve Roasteries, will be equipped with their own roasterie, and will organize coffee tastings. A cup of coffee there will cost $ 12. The company has already opened the first such coffee house in Seattle.

Competitors are stepping on Starbucks’ toes. On the one hand, the company has to compete with premium coffee shops and companies specialized in roasting and selling different varieties of coffee (eg, Stumptown and Intelligentsia), on the other - with mass brands (eg, Dunkin` Donuts), which are introducing more and more various kinds of coffee. Starbucks’ sales growth has slowed in recent quarters.

Howard Schultz is one of the main business geniuses of our time. He is a President, Chief Executive Officer and Chairman of the Board of Directors of Starbucks Corporation. Howard was born in Brooklyn in a poor family, and grew up in neighborhood of houses for low-income families. He became the first person in his family who graduated from college and received a bachelor's degree.

In 1982, 29-year-old Howard literally begged Director of Starbucks Jerry Baldwin to hire him as Director of Marketing. By that time, Starbucks had specialized in sale of coffee beans. In 1983, Schultz traveled to Italy, where he was literally fascinated by Italian espresso bars. Howard suggested the company’s management to transform Starbucks into a coffee chain, but received a categorical refusal and decided to leave the company.

In 1986, Schultz opened his own coffee shop called Il Giornale. A year later, owners of Starbucks decided to sell the company for $ 4 million, and Howard entered the game. So he became full owner of Starbucks Corporation. In his hands, Starbucks grew into the largest coffee company in the world with more than 20 thousand coffee shops currently opened in 64 countries. 

In 2006, Schultz entered into Forbes’ list of 400 wealthiest people in the United States with a bank account of 1.1 billion dollars. USAToday then comapres Schultz to Bill Gates.

 After the announcement that Mr. Schulz is going to leave the company, Starbucks’ shares fell 3.6%, as Howard Schultz was a personification of the brand for many investors.