New Starbucks CEO plans to work in stores monthly

By DEE-ANN DURBIN
AP Business Writer

Starbucks’ new CEO Laxman Narasimhan says he plans to work a half-day shift once a month in one of the company’s stores in an effort to stay close to its culture and customers.

Narasimhan, who took the reins as CEO earlier this week, said in a letter to Starbucks’ employees Thursday that he also expects the company’s leadership team to be connected and engaged in stores.

“While our performance is strong, our health needs to be stronger,” Narasimhan wrote in the letter. “We must care for the artists and the theater in the front of our stores and the factory in the back.”

Having a CEO work in stores is new for Seattle-based Starbucks, but not unprecedented among big companies. DoorDash CEO Tony Xu and his executive team make DoorDash deliveries once a month, for example.

Narasimhan, 55, issued the letter just prior to the company’s annual meeting, which was held virtually. The former PepsiCo executive has spent the last six months immersing himself in Starbucks, earning his barista certification as well as visiting stores, farms and manufacturing centers across the world.

“I felt it was very important to start as a barista. I wanted to really understand what they do and how they do it,” Narasimhan said in comments emailed to The Associated Press. “I’ve loved and learned so much about the retail experience from working in our stores, and can now make an excellent French press if I do say so myself.”

Narasimhan said his first priority is addressing some of the company’s limitations. A reinvention plan announced last fall is updating equipment and layouts to make stores more efficient and increasing employee retention with better pay and benefits, he said. The average U.S. Starbucks worker now makes $17.50 per hour.

Narasimhan said he would like to see Starbucks evolve into a more global company, be less wasteful and move with greater speed.

“My immersion provided me with exposure to every aspect of Starbucks business, culture, and brand,” he said. “Together, we have acknowledged the opportunity for a refounding of Starbucks.”

Narasimhan succeeds longtime Starbucks leader Howard Schultz, who came out of retirement last spring to serve as interim CEO while the company searched for a new chief executive. Schultz will remain on the company’s board.

Some investors were unhappy with that move, saying Starbucks should have had a more robust succession plan in place when former CEO Kevin Johnson retired last April. Among the shareholder proposals investors voted on Thursday was one that would require Starbucks’ board to begin succession planning at least three years before an expected transition.

Another shareholder proposal would require Starbucks to commission a third-party assessment of its commitment to workers’ collective-bargaining rights. That proposal came amid an ongoing unionization movement that Starbucks opposes.

At least 293 of Starbucks’ 9,000 company-owned U.S. stores have voted to unionize since late 2021. Workers have begun bargaining with the company but so far no store has reached agreement on a new contract.

The process has been contentious. Earlier this month, a federal labor judge found that the company violated labor laws “hundreds of times” during a unionization campaign in Buffalo, New York. The company is appealing.

On Wednesday, workers at more than 100 U.S. Starbucks stores went on strike across the country, demanding that Starbucks come to the bargaining table and hammer out labor agreements. It was the third time that workers have held a nationwide strike.

Starbucks Workers United, the union organizing the workers, said it wanted to send Narasimhan a message that the CEO transition is an opportunity to break with the past and partner with the union. Schultz had a long history of opposing unionization.

But in his comments to the AP, Narasimhan struck a similar tone to his predecessor. He said Starbucks respects workers’ right to organize but believes the company functions best without a union.

“As a company, our experience is that a having a direct relationship with our partners is core to our culture and the experiences we create in our stores,” Narasimhan said. “I continue to believe a direct relationship with our partners is the best way forward.”

Starbucks said it would announce the results of the shareholder votes in the next few days.

Starbucks shares closed down less than 1% at $98.42 Thursday.