Former Starbucks CEO Howard Schultz is returning to the company on an interim basis, following the resignation of chief executive Kevin Johnson, effective April 4. Schultz, will also rejoin the company’s board of directors as it searches for a permanent replacement, according to media reports this morning.
According to the company, Johnson’s exit was not unexpected. In a statement, Johnson said he told the board last year “that as the global pandemic neared an end, I would be considering retirement from Starbucks.” He will remain with the company as a consultant and board member through September. The company has hired executive search firm Russell Reynolds Associates to help search for a replacement.
“I feel this is a natural bookend to my 13 years with the company,” he said.
During his tenure, Johnson has helped lead Starbucks to make a broader push in the CPG sector. Although the brand dominates the ready-to-drink coffee through its North American partnership with PepsiCo, it is slowly bleeding market share to competitors; in response, Starbucks has unveiled new innovations in recent years including a canned Nitro Cold Brew line and, most recently, an expansion beyond coffee through carbonated natural energy drink BAYA Energy to further grow its presence in U.S. retail.
According to NielsenIQ, the company’s RTD coffee business was up 3.9% in the two-week period and 8% in the 52-week period ending February 26 to $2.4 billion. However, in recent months volume has declined, as sales fell -2.1% in the two-weeks, but remained up 4% in the 52-weeks. In October, Starbucks announced full fiscal year 2021 consolidated net revenue of $29.1 billion, up 24% year-over-year.
Johnson is not the only recent executive departure for the company: Last year, Starbucks COO Rosalind Brewer stepped down to join drug store chain Walgreens as its CEO. Company veteran John Culver was appointed to the role in her place and was also named North American group president.
The return of Schultz, if only on a temporary basis, brings a familiar face back to Starbucks’ leadership as the company navigates rising inflationary pressures and a national unionization drive at its cafes. Schultz is widely credited with scaling the Seattle-based brand into a global organization, having previously served as chairman and CEO from 1986 to 2000 and again from 2008 to 2017. In 1992, Schultz oversaw Starbucks’ transition to a public company.
Schultz’s first return to the position in 2008 also came during a period of global crisis; he was re-appointed CEO during the Great Recession and helped turn around declines through a mass-firing of executives, upping M&A activity and making a greater push into China. His second departure from the company in December 2016 was described in press reports as a “surprise” to investors, and was later followed by his exit as executive chairman in 2018.
Schultz briefly considered a run for President of the United States in 2019 but ultimately opted not to enter the race.
For his work this time around, Schultz will be paid a symbolic salary of just $1.
“When you love something, you have a deep sense of responsibility to help when called,” Schultz said in a statement. “Although I did not plan to return to Starbucks, I know the company must transform once again to meet a new and exciting future where all of our stakeholders mutually flourish.”
Despite spending several years out of the CEO role, Schultz has remained closely involved with the business. Late last year, prior to workers at a Buffalo, New York store voting to unionize, he wrote a letter to the team members urging them to vote No on the union effort which was published through the company’s website. Since then five more stores have voted in favor of unionization and at least 145 Starbucks stores nationwide are now weighing their own union votes.
The company has also come under scrutiny from federal regulators over its treatment of pro-union team members. On Monday, the National Labor Relations Board (NLRB) filed a formal complaint alleging that employees at a Mesa, Arizona cafe were punished by management for their position on the union push. Starbucks has called the allegations “categorically false.”
Yesterday, an investor group holding over $1.2 billion of Starbucks stock and led by Trillium Asset Management, issued an open letter addressed to Johnson and Starbucks’ independent board chair Mellody Hobson urging the company to take a neutral position on unionization efforts and to “swiftly reach fair and timely collective bargains with the workers should they vote to unionize.” The letter cited reputational risks for the company if management is publicly considered to be union busting and argued that an organized workforce could improve relations between leadership and on-the-ground staff.