Starbucks‘ chief executive Howard Schultz will step down from his role in 2017, ending a successful tenure atop the coffee giant in which he steered it to become a strong performing global powerhouse.
The coffee chain on Thursday announced that effective April 3, Schultz would retain his role as executive chairman but would no longer serve as CEO so he could pivot his focus on “innovation, design and development of Starbucks Reserve Roasteries around the world.” Schultz has been advocating a push into more premium coffees as a way for Starbucks (sbux) to compete and establish its brand with a stronger footing for the future. He’s sought to explore new concepts like the Starbucks Roastery in Seattle, a massive retail location that has a cafe and tasting room and helped kick off the company’s bigger bet on a more premium retail and coffee experience.
Kevin Johnson, who served as president and chief operating officer and is a seven-year member of the Starbucks board, will succeed Schultz.
“As I focus on Starbucks next wave of retail innovation, I am delighted that Kevin Johnson–our current president, COO, a seven-year board member, and my partner in running every facet of Starbucks business over the last two years–has agreed to assume the duties of Starbucks chief executive officer,” Schultz said in a statement. “This move ideally positions Starbucks to continue profitably growing our core business around the world into the future.”
The leadership changes caught investors off guard, coming a week before Starbucks is set to host the company’s investor day event. Shares were down a little over 3% in after-hours trading on Thursday.
Bu Schultz leaves Starbucks on firm ground after his second successful run as CEO. He previously ran the company from 1987 to 2000, but returned in 2008 after Starbucks fired former CEO Jim Donald. Under Donald, the brand found itself out of favor with consumers and shuttered stores as it faced slow growth in the U.S. during the financial crisis.
Since then, Schultz has had immense success turning around the company. Annual net revenue climbed from $10.4 billion in 2008 to $21.3 billion in the most recent fiscal year. The company has over 25,000 stores today, an almost even mix of company-operated and licensed locations. Back in 2008, it had close to 1,700 locations.
With that pace of expansion and sales growth, Starbucks has been a success story at a time when many big restaurant concepts have faced persistent sales and traffic challenges. This summer, for example, shares dipped after Starbucks posted U.S. comparable-store sales growth that was under 5% for the first time after 25 straight quarters of increases above that pace. That exemplifies the high bar that Wall Street investors had set for Starbucks that most other chains of similar size haven’t been expected to achieve.
New CEO Johnson has been integral to that success as well. He’s led the company’s global operating businesses across all regions and has helped steer marketing and investments in tech.
“Over the past two decades, I have grown to know Starbucks first as a customer, then as a director on the board, and for the past two years as a member of the management team,” Johnson said in a statement. ” Through that journey, I fell in love with Starbucks and I share Howard’s commitment to our mission and values and his optimism for the future.”