Starbucks CEO Laxman Narasimhan issued his first letter to shareholders Thursday underscoring how vital executing the company's "reinvention plan" is as it fights to enhance its brand while battling worker uprisings.
The company-wide reinvention strategy was introduced last year to improve stores and the employee and customer experience as unionization efforts swept the nation. Unfair labor practice charges also started to pile up against Starbucks and Starbucks Workers United, the group organizing workers, as the contentious process ensued.
"While our performance is strong, our health needs to be stronger," Narasimhan wrote in the letter to shareholders just days after taking his seat at the helm of the company.
Narasimhan officially assumed the role as CEO on Monday, two weeks earlier than expected. He succeeded Howard Schultz, who came out of retirement last spring to serve as interim CEO and find a permanent replacement for Kevin Johnson.
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Narasimhan told shareholders that in order for the Seattle-based coffee giant to realize its limitless potential, "we have to first address what is limiting us."
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The company-wide reinvention strategy requires a continued focus on long-term hiring and retention as well as investing in partner wages and revamping store operations, according to Narasimhan.
"Actioning our reinvention plan has been a critical step in unlocking our limitless potential," Narasimhan said, while acknowledging that the company has more work to do.
Starbuck's shares are little changed this year, compared to a 2.5% rise in the S&P 500.
Narasimhan, a former PepsiCo executive, is in charge of seeing this reinvention strategy through and ensuring long-term sustainable growth for the company which now encompasses over 36,000 stores in over 80 markets worldwide.
For long term growth, Narasimhan went on to explain that the company needs to discover ways to further "elevate the brand" through its coffee and stores.
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This includes strengthening and further scaling digital experiences for customers while working to become less wasteful and increasing speed.
Narasimahan also plans to help create a more global presence for the business and "reinvigorate our culture around what it means to be a partner at Starbucks."
Over the past five months before assuming the role of CEO, Narasimahan worked with employees in over 30 stores, manufacturing plants and in support centers around the world.
In order to stay "close to the culture and our customers" Narasimhan plans to keep working in stores for a half day each month, he said.
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Meanwhile, Schultz, who will remain on the company's board, is preparing to face questioning from a U.S. Senate committee next week regarding the company's handling of the unionization campaign. Over 280 stores have already voted to unionize with the hopes of attaining better pay, schedules and safer stores.
The company opposes unionization, saying it already provides industry-leading benefits and its stores function better when it works directly with its employees.
The Associated Press contributed to this report.
