Starbucks CEO Schultz Blasts ‘False Promises’ by Past Management

(Bloomberg) — Starbucks Corp. Chief Executive Officer Howard Schultz, moving to further put his stamp on the coffee giant in his third stint at the helm, criticized “false promises” and poor short-term decisions by prior management in a message to employees.

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In a seven-minute video set to be sent to Starbucks employees Friday and viewed by Bloomberg News, Schultz discussed the feedback he received from employees around the country in recent meetings he dubbed “co-creation sessions.”

“I think there’s been a lot of false promises over the last few years — those days are over,” Schultz said, without elaborating. “We’re going to make promises that we can keep, we’re going to make promises that are real.”

Schultz said he realized through the employee sessions that “there’s been many short-term decisions that have had an adverse long-term effect on the company. We’re going to reverse that. We’re going to make much better long-term decisions that are going to have a short-term benefit for you.”

Employees expressed desires for better training and guaranteed hours, Schultz said, as well as detailing problems such as ice and espresso machines breaking and taking a long time to get repaired.

“We are going to fix the near-term problems like maintenance people not showing up on time … and we’re going to fix the bigger issues of training, wages and the other issues facing the company,” he said.

The 68-year-old Schultz earlier this month succeeded Kevin Johnson, 61, who had been CEO since 2017. He has moved swiftly in the role, suspending share buybacks to spend more on stores and staff, and dismissing former General Counsel Rachel Gonzalez as the company contends with a fast-spreading unionization effort.

Starbucks shares have been under pressure for months and have continued to fall during Schultz’s renewed tenure as investors worry his plans will squeeze profit margins. The stock was down 32% this year through Thursday, worse than the 7.8% fall of the S&P 500 index.

Schultz didn’t refer directly to the union fight in his video message but pledged to execute against the “fantastic ideas” employees had shared with him.

“We have to reimagine the customer experience, the partner experience, the third-place experience; we have to reimagine mobile order and pay, the drive-thru,” he said. “We have a lot of work to do.”

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