Starbucks gets stronger tech shot under new CEO

VIDEO: REUTERS
For many shareholders and customers, Mr Schultz (left) has embodied Starbucks. Over the past three decades, he turned much of the world into coffee aficionados, bringing lattes and mochas to 70 countries. Come April 3, Mr Johnson, a 33-year veteran o
For many shareholders and customers, Mr Schultz (above) has embodied Starbucks. Over the past three decades, he turned much of the world into coffee aficionados, bringing lattes and mochas to 70 countries. Come April 3, Mr Johnson, a 33-year veteran of the tech industry who became Starbucks' chief operating officer last year, will take the helm.PHOTO: REUTERS

NEW YORK • After turning Starbucks Corp into the world's largest coffee chain, chief executive officer Howard Schultz will hand the reins to a lieutenant who could solidify its role as a technology company.

Mr Kevin Johnson, a 33-year veteran of the tech industry who became Starbucks' chief operating officer last year, will take the helm from Mr Schultz on April 3.

The move is a nod to the company's growing reputation for innovation: It introduced the world's first successful mobile-payment service, beating out the likes of Apple and Google, and gets an increasingly large portion of its revenue from that source.

Mr Schultz will keep the role of executive chairman at Starbucks, focusing on the rollout of its upscale Reserve brand.

"I'm not leaving," Mr Schultz, 63, said after the change was announced on Thursday. "But Kevin and the team are in charge."

Mr Johnson, 56, who joined the board in 2009, previously worked at Microsoft and Juniper Networks.

The CEO change jarred investors, who briefly sent the shares down as much as 12 per cent, even though Mr Johnson had been seen as a possible successor since he took the No. 2 job last year.

For many shareholders and customers, Mr Schultz has embodied Starbucks. Over the past three decades, he turned much of the world into coffee aficionados, bringing lattes and mochas to 70 countries.

And he has used the company to pursue social causes - occasionally clumsily - such as racial strife and sustainability.

Mr Schultz will focus on expanding Starbucks' Reserve Roasteries, a chain of massive coffee houses providing tastings and other experiences, as well as new Reserve retail outlets.

Having both executives focus on different parts of the company could have benefits, said Bloomberg Intelligence analyst Jennifer Bartashus. "I do think the 'divide and conquer' strategy is probably good for the company long term."

Starbucks' digital and tech prowess has put it ahead of its peers, allowing it to serve more customers faster. Same-store sales rose 5 per cent in the Americas region in the most recent quarter. Mobile payments made up about 25 per cent of US transactions in that period.

Starbucks built on its tech leadership with an order-ahead feature, which lets customers select and pay for drinks in advance. They then pick up the beverages at a shop without waiting in line.

Since Mr Johnson became operating chief, Starbucks has rolled out mobile ordering across the United States and even tested delivery. It is also boosting spending on digital ventures, including taking its app and rewards platform to countries such as China.

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A version of this article appeared in the print edition of The Straits Times on December 03, 2016, with the headline 'Starbucks gets stronger tech shot under new CEO'. Print Edition | Subscribe