Drip, Drip, Drip

How did Starbucks become the bad guy? A perfect storm of confounding management decisions, worker discontent bordering on a revolution, customer pushback against its image, and any number of other negatives have produced one of the more dramatic transformations in American branding history.

But let’s not resort totally to clichés and generalizations. Admittedly, Starbucks remains one of the most successful and popular businesses in the hospitality sector, indeed in all of retailing. It had revenues of more than $37 billion last year, with about $1.8 billion of that falling to the bottom line. It operates over 40,000 stores around the world and is the largest or second largest (after McDonald’s) restaurant brand on the planet.

If you want to put things in perspective, Starbucks has always had its detractors. Coffee purists complained about its taste (burnt was the most common gripe) and how the big bad chain was putting small, local barista shops out of business. They didn’t care for the faux-Italian names for container sizing, much less the convoluted beverages inside of them. And some people even hated the logo.

But the fact is that you don’t get to be that size and ubiquitous without ardent fans. There are generations of Americans who can’t imagine going a day without their no-foam, half-decaf caramel Macchiato with almond milk and an extra shot in a Venti cup.

And when they can’t get to their local neighborhood establishment, they brew Starbucks at home and grab a cold one from the fridge every afternoon to the tune of more than half a billion dollars a year in revenue.

Nobody else is even close…with all due respect to the Dunkin’ folks.

Flat White

So, where did things go wrong? It’s hard to pinpoint a moment in time, but maybe you can point to the botched transition that the company’s mastermind Howard Schultz brewed up in 2000 when he retired and turned the company over to Orin Smith…only to return in 2008 when Starbucks was in a bit of a tailspin. That didn’t sit well with investors, customers—or most of all Schultz.

He stayed on for another decade, getting the coffee beans back in a row (at least according to him), retiring in 2018, and putting Kevin Johnson in as CEO. One of the more familiar names in retailing transitions, Mike Ullman, was named as chairman. But proving that Bob Iger at Disney has got nothing on Schultz when it comes to second (and third) lives in the corner office, he returned yet again in 2022 as interim CEO before, yet again, retiring the following year. He finally left the board, and so far, it seems for good. Is the third time charmed?

Succession? Not So Fast

Schultz may be gone, but the management mayhem is not. And while whoever is occupying the corner office in Seattle—or elsewhere (more on that later)—may not matter much to the latte-swilling customers, constant turnover in leadership eventually takes its toll.

The new CEO, this time joining in 2023, was Laxman Narasimhan, who came over from PepsiCo. He lasted 18 months, quick even by Starbucks 21^st-century standards.

Taking over in September 2024, we now have Brian Niccol, who earned his hospitality stripes by turning around Chipotle. His two-year tenure at Starbucks has been bumpy, to say the least. First, there was the matter of his compensation: $30 million in 2025. That’s pretty hefty, especially considering that he laid off more than 1,600 people at the company headquarters in his first year.

Not that Niccol is always sitting in that corner office, mind you. A Southern Californian, he arranged a work schedule that has him spending part of his time at a specially constructed office in Newport Beach and the other part in Seattle. Rather than commuting by commercial, there was the controversial matter of private jet transportation. The out-of-pocket cost ran in the general vicinity of $3 million a year if you include his housing in Seattle and security…although we’re not exactly sure why you need that if you’re flying private and getting chauffeured around in both towns.

Brian’s Song

Since taking over, Niccol has not exactly endeared himself to investors, employees, and perhaps customers as well. Company profits sank about 85 percent last year even as total revenues edged up a few ticks. Its share price has only declined about 3.6 percent over the past two years but has suffered through some wild gyrations during the period, up by nearly a third and down by more than a quarter. It recently did some more tossing and turning over rumors this past week that it was looking to buy Niccol’s old company, Chipotle, a report Starbucks subsequently denied.

Employees have not been entirely thrilled with the new boss either. His “Back to Starbucks” turnaround plan was not warmly embraced by many of the company’s quarter of a million (give or take a barista or two) workers even as Niccol admitted the plan was not quite percolated. Besides the layoffs at the corporate offices, the frontline restaurant staff has taken issue with bread-and-butter basics like dress codes, break times, drink container personalization, rigid turnaround standards, and what some have characterized as “top-down” management.

And then there’s China. In April, the company sold a 60 percent controlling interest in its business in the country to a local company which said it will grow the current 8,000 locations to as many as 20,000. Starbucks was one of the first U.S. retail brands to open stores in China, and it had much success before being caught up in a one-two punch; the first was local competition. Luckin Coffee has 30,000 shops in the country and has even opened its first locations in the U.S. recently. The second punch is the general anti-American and anti-Western sentiment that hasn’t been kind to just about any U.S. brand operating overseas. Niccol says, in not so many words, that Starbucks remains a work in progress and that when all the pieces are put in place, things are going to be just fine.

Drink Up

In the meantime, there’s the Starbucks customer. They don’t seem to know or even care about all the internal turmoil; they just want their lattes faster. So far, that speedy delivery isn’t necessarily happening on any detectable scale. Starbucks has generally spruced up the shops, and one could argue that the service is friendlier…at least most of the time.

But is Starbucks better? While you can debate that from both sides, the fact is that people are still lining up at drive-through windows around the country to get their Starbucks fix, and there doesn’t seem to be any appreciable change in the length of those lines (at least the two times I went…so far…this week).

Starbucks has a position in its lane that just about any other hospitality chain would kill for. It has survived seven CEO changes over the past two-and-a-half decades and yet it has continued to grow and serve billions of Grandes, Ventis, and Trentas during that time, not to mention some pretty tasty pastries.

It’s not invulnerable to failure—no business is. But it’s as good a brand as any in consumer products today. It will even remake your drink if they get it wrong the first time around. Try that at Mickey D’s or Pizza Hut and see what happens. Niccol has a limited shelf life to get this thing right: Let’s face it, the company would be really stupid to bring in yet another CEO so quickly and start all over again. He’s made some improvements, but many would say not enough.

Starbucks was always Howard Schultz’s invention, he’s the one who took it from a little coffee bean shop across the street from Seattle’s Public Market to the iconic status and size it has now. I don’t think anyone wants him to come back yet again—least of all Howard (though he’s only 73 years old, relatively young as U.S. leaders go these days).

So, it’s Niccol’s show for now. He proved he can do a turnaround at Chipotle; he also ran Taco Bell for several years, and he has a stint at P&G on his resume, so he gets consumer products. Let’s not forget that Starbucks is no train wreck; it just needs some updating and a clean-up of its business model to return to where it was.

But investors are not a patient bunch. A CEO also has a limited window to get the employee buy-in they need to make things work. And oh, there’s that customer: They want their Pumpkin Spice Latte quickly…in a clean cup from a smiling employee. If Brian Niccol can’t make that simple thing happen, he might as well stay in Newport Beach.