Will New Starbucks CEO Add Washing Machines?

By Douglas A. McIntyre Published Sep 2, 9:30AM EDT

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Will New Starbucks CEO Add Washing Machines? — © deepblue4you / E+ via Getty Images

Laxman Narasimhan is an extremely odd choice to be the new chief executive officer at Starbucks Corp. (NASDAQ: SBUX | SBUX Price Prediction), the coffee store company. He won’t actually be CEO at all. The former head of Reckitt Benckiser Group will be trained to become CEO between October 1, 2022, and April 1, 2023. Howard Schultz, the off-and-on CEO at Starbucks, will handle the training. It is a wonder that Narasimhan will not even join the board immediately. He is not trained well enough to join the other directors.

Aside from the fact Narasimhan will have a waiting period, he does not seem to have the right experience to run Starbucks. Reckitt Benckiser sells Lysol disinfectant, Calgon washing machine cleaner and Durex condoms. Starbucks should have found someone with real, recent retail experience.

Starbucks shareholders were not excited by the decision. The stock rose 0.21% after news of the appointment. That is after a 27% nosedive this year to just above $85 a share.

Much of Starbucks is an experiment now. Schultz is testing how stores should be run and how baristas do their jobs. According to The Wall Street Journal, a quarter of these employees leave within 90 days of joining. That creates a churn among the people who are the face of the company. Each new barista has to be trained, so this churn must affect service.
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Narasimhan also has to decide whether the company’s efforts to keep unions out of its stores will be an important part of his regime. If Schultz has any say, the efforts will not change.
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Starbucks may want a completely new perspective on its business. If so, Narasimhan is a perfect choice. If retaining employees, raising sales and perfecting logistics are the goals, Starbucks should have turned to someone from Home Depot or Wendy’s.
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Starbucks also needed someone who could help the company immediately. Its shares were downgraded by Citigroup, Goldman Sachs and Wedbush earlier this year. Each was worried about expense pressures. Narasimhan seems ill-suited to address that pressing problem.

Coffee is not the same as washing detergent. In fact, it is not even close.

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.