Updated from Dec. 1 with analysts' comments
Don't call it a retirement.
The visionary leader of Starbucks, who was CEO from 1987 to 2000 and then again from 2008 until now, will assume the role of executive chairman, shifting his focus to innovation, design and development of the chain's high-end roastery concept. Taking over as CEO will be current Starbucks President and Chief Operating Officer Kevin Johnson, a long-time board member and Schultz confidant.
"Kevin has been a wise and supportive resource for me" through the years, Schultz told analysts on a conference call, adding that Johnson is "better prepared" to be the CEO of Starbucks given his "skillsets."
In his new role, Schultz will hardly be sitting back in a cushy seat and relaxing at home on a Wednesday afternoon. Instead, he will be trying like crazy to pull off quite another remarkable feat in a storied career: Get people to pay even more for a cup of coffee mostly by developing super premium retail experiences and likely, new exotic drinks and food.
In his second act, think of Schultz as attempting to turn Starbucks into the Louis Vuitton of coffee -- a premium experience both in terms of product (coffee and food) and shopping ecosystem (how you order and ultimately enjoy coffee and food).
He will drill down on two areas to try and make this coffee "premiumization" happen.
The first Starbucks roastery in the company's hometown of Seattle.
First is by overseeing a global roll-out of Starbucks' massively over-the-top retail concept called the Reserve Roastery and Tasting Room. The original roastery and tasting room concept swung open its doors in December 2014 in the company's hometown of Seattle. That 15,000-square-foot store features a range of higher-end, small-lot coffees from around the world, a more expansive menu of food than that found at a typical Starbucks and a giant coffee roasting facility.
Results at the original Seattle roastery have been nothing short of stellar. Same-store sales surged 24% in the fourth quarter ended Oct. 2, 2016.
Starbucks has already chosen its next two sites for roasteries -- a 20,000 square foot location in New York City's Meatpacking District that is scheduled to open in 2018 and a 30,000 square foot box that will open in Shanghai in late 2017. The company has also signaled a a roastery opening in Tokyo in 2018 and one in Europe in 2019 in a city to be announced early next year.
"In addition to elevating the Starbucks brand and customer experience, our Seattle Roastery has also become a working laboratory for breakthrough innovation that is driving new product introductions and contributing to results across the entire Starbucks ecosystem," Schultz said to analysts on a Nov. 3 conference call.
Schultz sees as many as 20 to 30 roasteries eventually in operation around the world.
As Starbucks is opening what amounts to apparel-brand like flagship stores in major tourist markets, Schultz will also be taking the brand more upscale via another new concept.
Schultz will focus on rolling out a fancy new Starbucks concept called Reserve.
Dubbed the Reserve brand, the upscale cafes feature some of Starbucks' fancier coffee blends and drinks. Starbucks has said in the recent past it sees over 500 Reserve locations open globally over the next five years. Over time, Schultz believes the concept could reach 1,000 or more in number. It also could show up in a Reserve bar form (imagine ordering a $7 iced coffee made from rare beans from a bar stool inside Starbucks) in some 20% of Starbucks stores, Schultz pointed out on the November 3 call.
Starbucks hinted on the call Thursday that it has a new design for the Reserve brand -- a 3,500 square foot box -- to be unveiled at its investor day next week.
"We believe this evolution is just another demonstration of the forward thinking ability of management in addressing the changing needs of the consumer, not unlike the acknowledgement three years ago of the "seismic shift" within retail away from bricks & mortar and towards online and mobile," said Barclays analyst Jeffrey Bernstein in a note. "This [news] demonstrates their confidence in building this new franchise within Starbucks," added Bernstein.
"I'm not leaving the company. I will be here every day -- but Kevin and the team are in charge," Schultz said Thursday. Indeed Schultz' life after yielding the CEO title is shaping up to be pretty similar to right now -- darn busy and full of big ideas to execute.