When Starbucks Corp. (NASDAQ: SBUX) releases earnings on October 29, the report will likely confirm what many people who follow that company believe. Same-store sales will still be in trouble. Revenue is expected to remain flat, and earnings are projected to decline. CEO Brian Niccol has frantically changed Starbucks’ direction. The latest move was to close several hundred stores. Closing stores is rarely a good tactic when same-store sales are struggling.
Starbucks’ stock is down 15% in the past year, while the S&P 500 is up 17%. Bad earnings will likely further lower the price.
Niccol tends to give names to his significant corporate changes. The store closing one is called “Project Bloom.” During the last earnings call, he referred to a “Back to Starbucks” strategy. This included creating new barista uniforms, reducing the number of menu items, positioning Starbucks as a local coffee shop, and laying off hundreds of corporate employees.
Independent lead director Jørgen Vig Knudstorp will have to push the plan for a replacement. Some of the best candidates:
“Founder” Howard D. Schultz, who keeps coming back as CEO when Starbucks is in trouble. Worker unions do not like him, but he knows every aspect of the company.
Josh Kobza is Restaurant Brands International’s chief executive officer. The company owns Tim Hortons, Burger King, Popeyes, and Firehouse Subs. He has held positions including chief operating officer, chief technology officer, and chief financial officer. The company has 32,000 locations in 120 countries, and its annual revenue is almost $45 billion.
Rick Cardenas is the president and chief executive officer of Darden Restaurants. The company runs Olive Garden, LongHorn Steakhouse, Yard House, Ruth’s Chris Steak House, Cheddar’s Scratch Kitchen, The Capital Grille, Chuy’s, Seasons 52, Eddie V’s, and Bahama Breeze. He also has strategic training from his time at management consulting firm Bain & Company.
Scott Mezvinsky, CEO of KFC, reports directly to the CEO of Yum! Brands. KFC is arguably its parent company’s most successful division. He has run the financial and strategy parts of the division, and KFC has 30,000 stores across 150 countries.
The board has several good candidates, and it should move now before that stock collapses.
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