On April 4, local time, Starbucks announced the official return of founder Howard Schultz, taking over the position of CEO of the company and will enter the company's board of directors. In an open letter released the same day, Schultz said he would re-outline the company he had created.
"Our company is in a restructured world, facing a variety of new normals: pressured supply chains, the significant impact of COVID-19, rising tensions and political unrest, multicultural inclusion, and a new generation of young people demanding corporate responsibility." Schultz wrote in an open letter, "We either choose to face the challenge head-on or stand by and watch." ”
Schultz said the first thing to do after returning is to spend more time with partners (i.e., employees) to motivate everyone to speak up. In the coming weeks, he will join the leadership team in meeting with partners in stores and factories around the world to discuss how to shape the next generation of Starbucks.
At the same time, Schultz also announced that it will immediately suspend the stock repurchase program. "This decision will allow us to invest more profits in our partners and stores, and it is the only way to create long-term value for all stakeholders."
In 1999, Starbucks entered the Chinese mainland market, and initially embarked on the "altar" with the aura of "boutique" and "petty bourgeoisie", but the development has gradually ushered in fatigue. The latest financial data shows that as the world's second largest market, same-store sales in the Chinese market fell by 14% in the first quarter of fiscal 2022, with the average unit price falling by 9% and the transaction volume falling by 6% – this is the second consecutive quarter of decline.
Since 2018, the pattern of the domestic coffee market has undergone major changes. The rise of "dark horse" Luckin has caused Starbucks marketing costs to rise and customer diversion to a certain extent, and in the following two years, foreign well-known coffee brands such as Tims, Peets, and Blue Bottle have accelerated their entry into the Chinese market, and local specialty coffee brands Manner, Seesaw, and M stand have also quickly completed multiple rounds of financing and expanded rapidly.
For Starbucks, the "jianghu status" accumulated over the past 20 years is being eroded, and the burden of leading it to fight and evolve again will fall on the "legendary CEO" and "father of Starbucks".
In more than 40 years as CEO and chairman of the board, Schultz led Starbucks from just 11 stores to more than 28,000 stores in 77 markets around the world; when Schultz left the company as CEO in 2017, the company's stock price increased by 21,000% compared with the beginning of the listing.
"I came back to the company precisely to work with all of you to paint the next Starbucks — a company with a sense of purpose and constant evolution, a company that everyone can take on, a company where we work together to bring positive change to the world." Schultz wrote in the open letter.
In the face of competitors' "chasing and blocking", the old coffee giant has also begun to carry out new explorations in transformation and upgrading in many aspects. Since last year, Starbucks has actively innovated its operating model, expanded the new form of "third space", and launched business social experience projects such as "shared space concept store" and "1971 living room", extending business social and leisure entertainment scenes to start the business of sharing conference rooms and commercial communities.
The latest data shows that in the first quarter of 2022, Starbucks opened 197 new stores in China and entered 16 new cities, all of which hit a record high. Starbucks also said it is confident of achieving "outstanding" revenue growth in fiscal 2022, expecting margins to improve year-over-year in fiscal 2023 and return to long-term targets of 18% to 19% in fiscal 2024.
Image source: Starbucks