Updated from 5:11 p.m. ESTSAN FRANCISCO -- Starbucks ( SBUX) is hoping to return to its glory days by bringing back the man who created the company and brewed it to success. Howard Schultz will add to his current position as chairman to also become chief executive of the java giant, replacing Jim Donald, who is leaving the company. Schultz had served as CEO from 1987 to 2000, helping to grow the company from a humble chain of 100 coffee shops to about 15,000 stores today.
Schultz Facelift May Reheat Starbucks
But Schultz also placed much blame squarely on the company itself. Starbucks' share price has sunk nearly 50% since the beginning of the year. "I think it's one thing to look at the economy and commodities and use that as a buffer, but I strongly believe that much of the problems we have is self-induced," he said. Rapid growth has led to unwieldy bureaucracy within the company, which Schultz said he plans to eliminate. He noted that Starbucks has lost its focus on its customers, allowing competitors to swoop in and replicate its business model. Last February, Schultz put out a memo in which he spelled out much of what he thought had gone wrong with the company. "Over the past 10 years, in order to achieve the growth, development, and scale necessary to go from less than 1,000 stores to 13,000 stores and beyond, we have had to make a series of decisions that, in retrospect, have lead (sic) to the watering down of the Starbucks experience, and, what some might call the commoditization of our brand," he wrote. On Monday, he reiterated some of those same criticisms, adding that Starbucks must work harder to distinguish itself from its competitors. "I am not satisfied with where the business has been with our relationship with our customer," Schultz said.
Although he declined to provide specifics, saying that he would prefer to wait until the company's next earnings release on Jan. 30, Schultz said the company will now zero in on the customer experience by offering new products and more store design elements. He noted that much of the innovation that has taken place so far has been an extension of what the company already offers to its customers. "When you've succeeded for so long, you go a little soft," he said. Schultz said that changes need to be made to order to re-energize the company. "We are at that point," he said.