Starbucks fires CEO Donald, brings back Schultz "for the long term"

Starbucks is bringing its chairman and former chief executive, Howard Schultz, back to lead a major restructuring initiative, replacing CEO Jim Donald. Starbucks says the leadership shuffle is part of a series of initiatives to increase shareholder value, which also include closing underperforming U.S. stores and slowing the pace of store openings. || Read Schultz's letter and voicemail to Starbucks partners. || What do you think Schultz should do right away? (Read the Associated Press story)
> "There will be important changes across the company." Starbucks' Q-and-A section notes: "It will also be fun to see the enthusiastic response of our customers when we show them once again the creativity, innovation and excitement that has made us one of the best known and respected brands in the world.
> Schultz has to prove he hasn't lost his touch at execution, writes Herb Greenberg. "My guess (and bias) is that he’ll do just fine. As will Starbucks, the brand."
> "We lost the focus on what we once had, and that is the customer," Schultz says in a call to investors.
> Wall Street loves the news: Shares of Starbucks were jumping $1.12, or 6.1%, to $19.50 in after-hours trading Monday.
> THE INFAMOUS MEMO: Almost a year ago Schultz talked about "the watering down of the Starbucks experience, and, what some might call the commoditization of our brand."

Comments

[Boring Market]

I hope this is the turning point for their declining stock price, though the business is strong and they still are the market leader.

This makes me feel better about our direction. I have faith in Howard.

[Pat Nerr]

Congrats Starbucks partners...!

[xsbuxdm]

About time!! It will take awhile though. Realignment of leadership is a great start! I left after almost 11 years because of piss poor leadership in my area.

Bring back Howard Behar and Orin Smith and the game will be on again!

[BOSTON STARBUCKS REBEL]

I am most excited to hear this news. Uncle Howie to the rescue!

BOSTON STARBUCKS REBEL ALLIANCE
LONG LIVE HOWARD SCHULTZ
STARBUCKS REBEL ALLIANCE
AIM SN: BOSTONSTARREBEL

[N]

Finally! A decision headed in the right direction!
I'm looking forward to a realignment of leadership. It seems we've lost so many good to great leaders... while picking-up any ol' management-type along the way. It's time to get back to allowing managers to do their jobs, baristas to do their jobs, and stop all of this extraneous crap that befuddles the focus.

Whatever happens... I'm looking forward to the changes because, yes; I trust Howie.

I haven't felt this motivated in some time!

[frubner]

Howard is great and wall street wanted him humbled and guess what they got their way and we got ours. He is back and the stock is responding. he is a master.

[Joe]

Hmmm...lets recap.

Did you trust Howie when he hired Jim Donald?

Did you trust Howie when he stood with Jim and continually talked about upcoming explosive growth?

Did you trust Howie when he stood with Jim and ok'd all the non coffee initiatives that presumably took everyone's eyes off the ball?

In other words, Howie never left. How anyone thinks the past two years went by without his participation is a mystery to me. If he participated, then he is just as much to blame as Jim for what's happened.

Replacing Jim is nothing more than smoke and mirrors. The same person is ultimately in charge. He may very well make changes that will eventually propel the company forward however Jim is nothing more than a scapegoat in this scenario.

[snagger]

Jim was an east coast song and dance man,he'll sure be missed at the shareholders' meetings. Maybe Howard can get a little help from Orin and get SBUX back on track.Its dedicated partners deserve the change.

WOOOOOO HOOOOOO !!!!!

Welcome back Howard!

[Darleen]

Words can not even begin to express what I'm thinking right now.....I wish this company much success, let's hit it out of the park this time!!!!

[Des]

Howie's BACK!!!!

Maybe some of the old fashioned "luvvvvv" will return to our stores. Oh, there is gonna be some head cuttin going on with the suits.

Joe makes a great point. My money's on that Howard never left. He just wasn't there officially.

This, though, is a great move. You partners can FINALLY feel like SBUX can deviate from the McDonalds road it's heading down.

[lux]

Great news IMHO.

[Andrea]

It's about time! I bought the stocks when it was in the mid-30's. And It kept tearing at me to see it go down so low.

Starbucks needs to generate some buzz....maybe announce that Wi-Fi will be free!

[Lucky McBucky]

Finally!! I am looking for the return of the vision, let's get back to the things that made us great!! I am ALL IN!

[Emma]

THANK. GOD.

Next announcement that should be made: tossing out all warmers and replacing auto-shot machines with low-profile manual espresso machines.

Now if he'd just kill all licensed stores (this coming from a partner who started out at a licensed location....

[Beantownsbuxbitch]

I am praying that things will change. I have lost a ton of money these past few months in stock, and actually opted out of SIP because of it. Baristas feel like no one cares anymore, because people who have no business being a Starbucks manager are getting promoted. It has been so bad at my store, that I actually have an interview at Dunkin Donuts on Wendsday. I don't want to leave the company, but I commute an hour a day to work. If I can work closer to home and be treated the same for the same money...why not. I am now going to reconsider leaving.

[stlssbxmgr]

Way to go H.S. Maybe it's time for the return pf the entire H2O team. Sounds like Skinner, Twohig and LaPorta are riding a fine line too.....

[Sue Matra]

Wow, super exciting news. A huge step in the right direction. I'll second bringing back Orin Smith as well.

[sbuxnewbie]

I also see that they plan to close underperforming stores... i just wonder what the definition of "underperforming" will be....

Will they arbitrarily set a cutoff of $15,000 per week? More? Less?

How long will it take for a store to qualify as "underperforming"?

We've been open less than two years, and while our sales are in excess of 30% more than last year (and with a LOT less merchandise over the holidays), we're still below the level that sales were anticipated as being, when they chose this location for a store.

I'm excited, and worried, too. I know that if my store closes, I've got 5 other managers who want me to come to them as a shift (they've already asked). I'd rather stay here, with my manager, unless and until a promotion comes along. Still waiting on that.

We'll just wait and see what happens.

[Sue Matra]

Just read the article. They are also planning to slow the opening of new stores. Another huge step in the right direction.

[Pat Nerr]

Sue... I knew a lady named Sue Matra at the SSC... same person??

[Andy]

Yes, yes, and yes! Excellent news and a smart move by Howard Schultz and Starbucks. I couldn't help but nod my head in agreement on so many points in Howard's statement. The Company was going in a bad direction, and fast, and Howard recognized it. He made this company what it is, and I have no doubt he has the skill, tenacity, and passion to return it to glory!

The timing of this announcement is important in two big ways:

1) It stops the bleeding on a stock price that was in a tailspin. It brings an immediate shot of confidence back into the company, and hopefully, stockholders/investors.

2) It returns focus to Starbucks on a day in which McDonald's makes a huge committment to espresso-based "beverages" (c'mon, it's McDonalds - have you tried it? I have...Blech!) at all of its locations. This overshadowing effect on a ever-growing competitor is huge.

I for one am excited about this news, and I hope it produces meaningful positive change for the Company and for its customers.

[seventysix [76]]

I am extremely happy with this news. Best of luck to Howard as he tries to fix this mess.

We can do our part too! Really astound your customers with legendary service! Best of luck to all partners as we go through this transition and put this company back together.

Best from,
seventysix [76]
Partner

[Sue Matra]

Sorry Pat, just a play on Sumatra. I've always been fond of the Joe Java/Fred Frappuccino fake names in the training materials.

[leeannaindiana]

i have not heard such good news in a long time.

i'm sure the next several months won't be easy, but i sure am excited to see what happens!!

pat, did you have any idea that THIS would happen? or just hoped it would? :)

[Bladerunner]

Kill all licensed stores(but not airports). Refocus on COFFEE! Thank You For Coming Back Uncle Howard!!!!

[Erin]

I agree with the poster who wishes for the return of real espresso machines. I was a partner back in the days when all stores had La Marzocco machines and making drinks was still something of an art. I used to get all my espresso at Sbux, but since all stores in my area have switched to push-button machines, I only get a decent espresso 1 out of 10 times. I bought a machine and make it at home now. I hope they can improve the quality of the drinks for people who still care about how the espresso tastes.

Turn the Barnes and Nobel Starbucks cafes to Seattle's Best. That would be a better fit. Those cafes just confuse the Starbucks brand.

[Barista]

Uncle Howie, great that you are back. Please also focus on DM's and SM's that seem to increasingly fail to set a leadership standard, look for the worst in others, fail to recognise, APPRECIATE and promote talent and engage in continuous back stabbing and gossip while attempting to perform their jobs.

[feministabarista]

This is the day the coffee gods have made... Finally I feel like Starbucks is heading in the right direction, like all is not lost, like our voice is being heard, like what we do everyday has value and is not on the chopping block. It's not even that "Howard is back", for me this is just the icing on the cake. Its that Jimbo is gone. He was just absolutely poisonous to our culture, and now its going to be a bright (bright), bright (bright), Sun-shinin' day!

[SBUXGUY97]

A fantastic start to 2008!

I do not believe at all that this is smoke and mirrors.
This company was Howards passion and dream. You read his book and you wish you could have such faith and passion and courage to build a different place. I worked in that place, and although I work for Starbucks, it is not that old place.
I really think he is taking his baby back. We all trust people that maybe we should not - lucky for Howard he realized it in time - or was told to realize it in time.
either way I am hopeful for what what was and what may be. It is worth it to hope so.

ange.

[samlltownsm]

On a day when I was beginning to feel burned out after a very long Holiday season, this is great news. I am so ready to fall in love with the company again and let that overflow onto my partners. I am so ready!!!

For what it's worth.....................

I share the thoughts that this is good news for the organization but I would caution all of you who are partners that this in and of itself will not solve some of the issues that have taken away from the "Starbucks Experience" It wasn't Howard who served a nine second shot, it wasn't he who allows scone crumbs to pile up in the furniture or allow trash to over flow. It wasn't him who makes me feel like I am being a burden on their time instead of recognizing that my dollars are actually what pay you.

Partners at the store level.......turning this around lies with us. Do not be satisfied with mediocrity from yourself or others. "Good enough" has rarely, if ever, been good at all for anything.

Lastly, stop blaming the 801 for all the issues with the espresso. I worked on LM for years and have had plenty of terrible shot from them as well. That quality comes from the pride the user takes in creating the shot. I don't know why we lost that but as part of above, we should get it back.

[Chris]

I am so super excited to hear this great news. Howard has got his hands back at the helm and hopefully will steer the ship in the direction we all know and have known for some time to be right.

[Lauren]

I agree this is not a solution.

Honestly though, I lost some serious cash in this last stock slide and even the mention of Schultz and I made almost a grand (thank you, thank you).

All I'm hoping is in our hearts we do lessen the "watering down" and return to the Starbucks I was hired to, not the one I work for.

[15yrsbuxvet]

There's a bit more house-cleaning that needs to take place in order to turn things around here. While Jim Donald's leadership never came close to those before him, it's people like Jim Alling who have been asleep at the wheel for far too long. As a former Partner and current shareholder, I'm pleased to see Howard step up, take responsibility, and assume control of the company that he is so passionate about. I do hope that he will remember the reasons why he relinquished that role years ago. While Howard is a brilliant marketer and visionary, he was best served when supported by strong support in the operations role. While Howard has stated that he is interested in flattening out the organization, which would be a wonderful thing, if ever there was a time for a COO this is it.
Kudos to Howard and the Board for demonstrating managerial courage and best wishes to all for even more success.

[No Name]

To: Jan 7, 2008 6:47:41 PM

Thank you and Bravo! What you said struck such a chord with me-you are so right...The dilution of the Starbucks experience really does live or die with US, the front-line staff. It's so obvious I'd almost forgotten it...Don't accept sub-standard ANYTHING-from cleaning to drinks to terrible partners, and we'll be just fine. :)

WELCOME BACK HOWARD!!!! Time will tell-I'm very hopeful and excited !

[CoffeeMan]

I share a lot of the thoughts posted above, especially about the gossip and backstabbing. I have been made to feel like a criminal at some Starbuck's. It has hurt me so much that I can't even express it in words. The coffee is fine - it's training and promoting the right people that's the problem. And a few more secret shoppers would help too, to weed out the employees that give away far too many drinks and take one hour coffee breaks!

Many things...

-get rid of the licensed stores
-build-in a month-long probation period that makes it easier to ax lazy, ineffective, unenthusiastic baristas... give them measurable goals
-improve the quality, and less the quantity of pastry options...
-for Seattle's sake... calibrate your shots and make quality drinks!

[AverageJoel]

OVERJOYED!

Can't wait to hear what's coming...

All I'm saying is scone crumbs don't pile up in my store.

In fact that's sort of my personal motto: "Not in my store."

Overflowing trash? Not in my store.
Substandard drinks? Not in my store.
Messes? Not in my store.
Unhappy customers? Not in my store.

I am so proud of the store in which I work that it's to the point where I'm almost elitist about it. I don't really want to work at any other store in my area because I think mine hits it on the head more often than any other store. We take pride in it, and I've had several "borrowed" partners come in and say that our store is the nicest they've ever worked in. Which makes me wonder why. Why don't all stores strive for the same sort of excellence?

[Joe]

Howard: Lose the stinky ovens. I want my coffee minus the stench.

[redbean]

"...since all stores in my area have switched to push-button machines, I only get a decent espresso 1 out of 10 times."

The 801 can make a great shot. And they WILL be getting better. Over 10,000 of the 15,000 new flavor profile kit upgrades are out there and need to be installed by the techs. Hopefully there will be a big push to calibrate shots throughout the day. I've had a 10-second shot from a LM and it's just as nasty as a 10-second shot from a 801.

"Lastly, stop blaming the 801 for all the issues with the espresso. I worked on LM for years and have had plenty of terrible shot from them as well. That quality comes from the pride the user takes in creating the shot. I don't know why we lost that but as part of above, we should get it back."

Well put. I think Howard stepping back into the CEO role is fantastic news. He has a passion for coffee. Please, please, please get back to the basics. It all started with a great shot of espresso and that's where it needs to return.

[starskilled]

howard was never gone. ever listen to a voicemail from jim donald??? nope, our thanksgiving voicemail??? howard shultz. and a realignment of leadership?? think, no asm's, dm's running stores, and customer run push button machines. its about getting back to the COFFEE not getting back to taking care of the barista. the only person they will be taking care of is the shareholder. and now we have to compete with mcdonalds. hello, micky dee's doesnt pay their PEOPLE crap. it costs a lot less to pay machines.
loved it while it lasted.

[jabanga]

good riddance jim donald. i know you will reap the rewards of some huge severance package but regardless of what happens in the future i take great delight at you being asked to leave. don't let the door hit you on the a**. maybe walmart'll take you back. it really is a much better fit for you.