"False Promises!" Howard Denounces Starbucks' Former Management!

According to Bloomberg, Starbucks CEO Howard Schultz has further strengthened his grip on the company during his third stint at the top. In an April 15 video message to employees, Schultz criticized the ineffective short-term decisions made by the previous management and condemned what he called the "false promises" it had made to staff.

Employee Feedback and Management Response

One day earlier, the interim CEO discussed, in another video message to employees, the feedback he had gathered from partners across the United States during a recent round of video conferences. He said the meetings gave him a clear picture of employees' grievances over the past few years: many short-term decisions by the former management had damaged the company in the long run, and multiple promises made to employees were never kept. Reversing that situation, he said, is now the first priority.

Although Schultz did not go into detail in the video, he pledged to make better long-term decisions that would also deliver meaningful short-term benefits to employees, and promised that every commitment the company makes to them going forward would be fully honored.

Employee Concerns and Company Commitments

In the video, Schultz said the most frequent feedback from the video conferences centered on three requests: better training, more reasonable working hours, and adjustments to pay and benefits. Employees also reported that many stores were struggling with broken ice makers and espresso machines — either no funds for repairs, or repair requests that were filed but never serviced on time. In response, Starbucks will first tackle the core problems weighing on the company: staff training, pay and benefits, and internal management.

Leadership Changes and Market Reaction

Earlier, after former Starbucks CEO Kevin Johnson announced his retirement, the board appointed Schultz as interim CEO until a permanent successor is chosen. On his first day back, Schultz halted the company's stock buyback program and dismissed Starbucks' Chief Legal Officer, Rachel Gonzalez.

Gonzalez had overseen stock buyback matters for the past year and earned $5.3 million over the course of the buyback process. After her dismissal, current board member Zabrina Jenkins stepped in as interim Chief Legal Officer.

Investors worried that Schultz's aggressive turnaround plans could squeeze profit margins. As a result, Starbucks stock has been under pressure for months and has kept sliding since his return. As of April 14, the stock had fallen 32%, compared with a 7.8% decline in the S&P 500.

Labor Relations and Future Direction

With unionization efforts escalating, Schultz did not address solutions directly in the employee video, but promised to push back against what he described as the "brilliant ideas" being shared with his partners.

At the end of the video, Schultz said: "We still have a lot of work to do. Therefore, we must reformulate our plans. In addition to solving internal company problems, we also need to quickly enhance the experience for customers, partners, and third parties."

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