Starbucks’ Howard Schultz announces retirement

After nearly 40 years, Howard Schultz will soon sip his Starbucks coffee from the seat of retirement.

On Monday, Schultz announced that he will step down as the coffee chain’s executive chairman of the board, effective June 26.

The Wall Street Journal reported:

Mr. Schultz laid the groundwork for his eventual retirement in late 2016, when he stepped down as chief executive to lead an effort at the company to build high-end coffee shops aimed at refreshing its brand, which has been facing increasing competition from specialty roasters.

When Schultz became Starbucks’ executive chairman of the board, Kevin Johnson took over as the company’s chief executive, where he will remain after Schultz’s departure. Myron Ullman, JCPenny’s former chief executive, will become Starbucks’ executive chairman, and Mellody Hobson will become vice chair.

Schultz previously stepped down as Starbucks’ chief executive in 2000, but he returned to the position in 2008. When not in the role of chief executive, Schultz served as the company’s executive chairman of the board. Monday’s announcement signals a new chapter in Starbucks’ history.

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Schultz has become the face of Starbucks, pushing the company to take stances on several societal and political issues.

The New York Times reported:

Under Mr. Schultz’s leadership, Starbucks has waded into debates over social issues such as gay rights, race relations, veterans’ rights, gun violence and student debt. Mr. Schultz was an early champion of the idea of a corporate executive as a moral leader as he sought to achieve what he described as “the fragile balance between profit and conscience.”

CNN Money reported:

Starbucks has also been a leader in workers' benefits under Schultz. Since 1988, Starbucks has offered health care to all full-time and part-time employees. In March, the company said it reached gender and race pay equity for all US employees.

"Schultz has been a pioneer in setting and maintaining a culture of social responsibility — both environmentally and socially — while being able to maintain financial performance," Tim Hubbard, a management professor at the University of Notre Dame's Mendoza College of Business, said in an email.

In a letter to partners, Schultz wrote:

Who could have imagined how far we would travel together, from 11 stores in 1987 to more than 28,000 stores in 77 countries. But these numbers are not the true measures of our success. Starbucks changed the way millions of people drink coffee, this is true, but we also changed people’s lives in communities around the world for the better.

When I think about what Starbucks stands for, I think about how our mission, values, and guiding principles have come to life: access to healthcare benefits for full- and part-time employees, more than 20 years before the Affordable Care Act. Bean Stock starting in 1991, which turned employees into partners who could share in the company’s success. Our ethical sourcing (C.A.F.E.) practices that have helped support farmers and nurture the land. Our years of community service and the C.U.P. Fund for partners in need. Our volunteer efforts in New Orleans and our annual Global Month of Service. Free college tuition through the College Achievement Plan. Our commitments to hire veterans, Opportunity Youth, and refugees. Policies like parental leave and pay equity. And our partners’ countless acts of kindness that occur in our stores, offices, roasting plants, and distribution centers every single day.

Schultz published a similar letter on his website. It read, in part:

There is so much to be thankful for. I’m most proud that Starbucks was one of the first businesses to offer health insurance and stock options to those who work full- and part-time. Our benefits have helped many of you care for families, buy homes, pay down debt, and go to college debt free.

Not all of Schultz’s initiatives have garnered praise, however.

Starbucks’ “Race Together” campaign drew criticism and more recently, the company closed more than 8,000 of its stores for racial bias training after two black men were arrested in one of its Philadelphia locations. Another racial incident happened shortly after. Both Johnson and Schultz apologized.

For several hours this afternoon, we will close stores and offices to discuss how to make Starbucks a place where all people feel welcome.

Thank you for your patience and support as we renew our promise to make Starbucks an inclusive gathering place for all.

See you tomorrow.

— Starbucks Coffee (@Starbucks) May 29, 2018

On 5/29 we united over 175,000 US partners (employees) to have meaningful conversations on race, bias and the building of a diverse, welcoming company. It was an important step in our journey.

Here is a link to the curriculum used in the session.

— Starbucks Coffee (@Starbucks) May 30, 2018

Especially after Starbucks’ most recent PR crisis, Johnson will soon have the challenge of repairing Starbucks’ reputation without its iconic leader.

Reuters reported:

Johnson faces a raft of challenges on the horizon. He is facing cooler growth in Starbucks’ dominant U.S. market and intense competition from rivals - ranging from high-end coffee shops to more affordable fast-food chains - as the company undertakes a massive expansion project in China.

While Johnson, a former technology executive, can turn to new Starbucks Chairman Myron Ullman and his decades of retail experience, the news left some investors questioning how the iconic coffee brand will evolve after the June 26 departure of Schultz, who has been a near-constant presence for nearly four decades and crafted the company’s inclusive culture.

While Starbucks works to continue gaining consumers’ trust and strengthening its brand image, rumors are circulating that Schultz’s retirement might signal an upcoming presidential run.

The New York Times reported:

While Mr. Schultz, 64, typically bats away speculation about his political ambitions with an eye roll or a pithy answer, on Monday he acknowledged for the first time that it is something he may consider.

“I want to be truthful with you without creating more speculative headlines,” he told The New York Times. “For some time now, I have been deeply concerned about our country — the growing division at home and our standing in the world.”

… Still, Mr. Schultz cautioned against reading too much into his decision to leave Starbucks. “I want to be of service to our country, but that doesn’t mean I need to run for public office to accomplish that,” he said.

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