Why Did Howard Schultz Return To Starbucks In 2008?

Starbucks is the world coffee giant, but by the early 2000s, the chain was in deep trouble. In 2008, it welcomed back Howard Schultz as CEO, who had resigned the position in 2000. It wasn't his return as leader—his return was the response to declining company performance and aligning to the core values that had propelled Starbucks to success.

Starbucks Faced Serious Challenges Before Howard Schultz Decided To Return As CEO In 2008

Over the years since Schultz's departure as CEO, Starbucks grew very quickly. While growth is generally a good thing, it wasn't entirely good. Starbucks added thousands of new stores, but customer service was lost in the process. The emphasis on efficiency instituted changes that stripped away the ambiance and personal attention that had originally set Starbucks apart.

By 2007, Starbucks was experiencing falling sales and stock prices. The business was also under threat from other coffee houses and fast-food chains with quality coffee at affordable prices. The global economic crisis was also starting to impact consumer spending. Schultz, who was still in the business as chairman, realized these warning signs that something drastic had to be undertaken.

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Howard Schultz Wanted To Bring Back The Unique Starbucks Experience That Made It Successful

One of the largest reasons Schultz came back was that he felt Starbucks lost its way. He had never been in business to sell coffee; he was more interested in providing quality coffee with a little friendly interaction. Starbucks over time started taking more of an interest in how to be efficient and big instead of care about the customer's experience.

Schultz wanted to restore what made Starbucks great initially. He chose to make stores better, customer service better, and excellent coffee a priority. In order to make a point, he even went so far as to close all U.S. stores temporarily in February 2008 in an effort to retrain baristas on how to pull espresso correctly.

Cutting Costs And Restoring Financial Stability Were Immediate Priorities For Howard Schultz

Schultz recognized that he needed to do more than enhance the quality of Starbucks' coffee—it also needed to get better financially. The company had become extravagant in every department, and he acted quickly to cut expenses. He shut down underperforming stores and centralized operations to make the company profitable.

He also centered on innovation with the entry of new items such as healthy food and enhanced online presence. Starbucks also improved on its reward system and payment methods through the cell phone, something that benefited the company years later in financial stability.

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Starbucks Needed to Adapt To A Changing Market To Remain Competitive Under Howard Schultz

By 2008, consumer habits had shifted, and Starbucks needed to shift somewhat. Individuals were looking for value and convenience, especially in a recession. Schultz wanted to add value to what Starbucks provided without losing quality while adding more value options to the equation.

He also included technology as a customer engagement opportunity. Online purchasing, mobile ordering, and Starbucks Rewards were the pillars of the company strategy under his tenure. This innovation allowed Starbucks to stay in the game without sacrificing providing the upper-end experience customers had grown accustomed to. 

Howard Schultz’s Leadership Helped Starbucks Recover And Grow Into A Stronger Global Brand

With the return of Schultz in the year 2008. His emphasis on quality, customer satisfaction, and fiscal responsibility brought the company back to its good standing. When he retired for the second time in the year 2017, Starbucks not only returned to its previous strength but became an even more powerful global brand.

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What his legacy has taught us, however, is not just that you build the business, but maintain the values that helped you succeed in the first place. Starbucks' success in revitalizing its relationship with the customer and bottom line with Schultz at the forefront is one worth studying in business leadership.