SEATTLE — Howard Schultz, the visionary leader of Starbucks,
said on Thursday he would step down as chief executive next year,
handing over to his personally selected successor the management of the
company he built into the world’s largest coffee business, with over
25,000 stores in 75 countries.
Mr.
Schultz, one of the most visible chief executives in the country, has
made Starbucks a vocal part of the national conversation on issues like
gun violence, gay rights, race relations, veterans rights and student
debt. The succession will take place on April 3, and he will remain at
the company as executive chairman, focusing on the company’s involvement
in social causes and on growing Starbucks Reserve, the company’s new
superpremium brand and chain of high-end stores.
Mr.
Schultz, 63, will be succeeded by his close friend Kevin Johnson, the
company’s current president and a longtime Starbucks board member.
“This
is a big day for me,” Mr. Schultz said in an interview. “I love the
company as much as I love my family.” But he said it was the right time
to hand the keys to Mr. Johnson, whom he described as being “better
equipped” to “run the company than I am,” ticking off a list of Mr.
Johnson’s operational talents, and saying that he wanted to “relinquish
the role and responsibility to the right person.”
Mr.
Schultz, who could be considered the Steve Jobs of coffee, grew up poor
in the Canarsie section of Brooklyn. He had a coffee epiphany while
paying a client call on a coffee bean store in Seattle in 1981, and then
went to work at the company the next year. In 1983, he visited Italy
and was impressed not only by the ubiquity of coffee bars, but also
their central role as community gathering spots — a role he refers to as
“the third place” in society.
Today,
Starbucks is adding about 2,000 new stores a year worldwide. And its
legacy under Mr. Schultz’s leadership includes many pioneering social
and philanthropic programs: In 1988, the company introduced full health
benefits for full- and part-time employees and their domestic partners;
in 1991 it was the first privately owned American company to include
part-time workers in its stock-option program; and so on, with efforts
that have included the “ethical sourcing” of ingredients, a college
degree program for baristas, and cups that use recycled materials.
“I wanted to build the company my father never got to work for,” he said.
At
an all-hands employee meeting at the company’s headquarters on
Thursday, Mr. Schultz was greeted with tears and a standing ovation.
“For me, perhaps there are other things that are part of my destiny,” he
told them.
The
move is likely to ignite renewed speculation about whether Mr. Schultz
is paving the way to leave the company entirely to enter politics. An
outspoken Democrat, Mr. Schultz has spent an increasing amount of time
traveling around the country speaking publicly about the need to fix the
“dysfunction in Washington.” He has a close relationship with President
Obama and had been a supporter of Hillary Clinton.
The
company’s political positions have sometimes created a backlash. During
the presidential campaign, Donald J. Trump and his supporters waged war
against Starbucks: In 2015, after the company redesigned its holiday
cups to remove Christmas imagery, Mr. Trump suggested a boycott. This
year, his supporters staged a protest called #TrumpCup in which they went to Starbucks and ordered drinks under the name Trump to get the baristas to call the name out loud.
Still,
Mr. Schultz said he intends for Starbucks to “maintain our moral
courage.” And he defended efforts like the company’s “Race Together”
campaign to spur a conversation about race relations, saying that it
“was not a failure. I’d do it again.” He said such campaigns are deeply
embedded in the company’s brand of “challenging the status quo about the
role of a public company.” He is excited by the question, “Since we
have stores in every community in America, how can we use our scale for
good?”
Although
the change may come as a surprise to the public and to some Starbucks
employees, the company has been sending signals to Wall Street for the
last year about its intentions to carry out a succession plan,
announcing a reorganization in the summer that gave Mr. Johnson
oversight of the day-to-day operations.
Mr.
Johnson, 56, spent his career in technology as a lieutenant of Steven
A. Ballmer, former chief of Microsoft, and later as chief executive of
Juniper Networks, before being recruited out of retirement by Mr.
Schultz in 2015 to become president and chief operating officer of
Starbucks.
Mr.
Johnson, a soft-spoken operator known for his focus on building
Starbucks’ mobile payments systems and executing the company’s global
strategy, has been on a listening tour with employees over the last
year. Conversations with store managers who told intimate stories about
their passion and relationship with the company have been known to bring
Mr. Johnson to tears.
The
succession plan is the second time Mr. Schultz has sought to step back
from overseeing the company. He became the company’s chairman in 2000
but returned as chief executive in 2008 after firing the installed
chief, James Donald, as sales faltered. Upon returning to Starbucks as
chief executive, Mr. Schultz increased the company’s market value to $84
billion from $15 billion.
In
an interview on Thursday in a tasting room at Starbucks flagship
Reserve Roastery in downtown Seattle, a Willy Wonka-like
15,000-square-foot premium coffee emporium that the company hopes to
open in large cities around the world, Mr. Schultz was animated and
emotional about his decision.
Referring
to his previous effort to step back, Mr. Schultz said: “I was not as
emotionally prepared for the moment as I am now. I don’t think I had the
conviction — I was still meddling.”
“I got succession wrong the first time,” he added. Of Mr. Johnson, he said, “I’m not going to be hovering and shadowing him.”
Still,
Mr. Schultz says he intends to remain a visible and active presence at
the company — his office is connected to Mr. Johnson’s — as he works to
introduce the company’s premium coffee brand with a small team that he
described as the equivalent of a start-up.
The
project calls for the opening of several large emporium stores — one is
being built in Manhattan and another in Shanghai — each year for the
next several years, as well more than 1,000 smaller premium stores and
premium “bars” in thousands of current Starbucks stores. “Building a new
brand is not unlike what Ralph Lauren did with Purple label,” Mr.
Schultz said.
Asked
about speculation that he might be laying the groundwork to run for
president, Mr. Schultz said, “I’m all in on all things Starbucks and
have no plans to run for public office.” Might he change his mind in the
future? “That’s the way I feel today,” he said.
Mr.
Johnson said that his decision to work at Starbucks came after he had
rethought his career, disclosing for the first time that he had a brush
with skin cancer that had led him to retire from Juniper. “It made me
think,” he said. “I only want to spend time on things on which I am able
to give something to people I love.” He called his job at Starbucks a
“gift” and acknowledged that he was somewhat nervous about his new role.
“Can I do this?” he said he asked himself. “I’m not going to try to be Howard. We are two different people.”
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