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☕️ Starbucks Hires New CEO to Take On Coffee-Making Robots

Starbucks had a tough year and there's a new CEO who's to fix issues and take on the robots. Welcome to 2022.

Author

Darwin B
September 12, 2022

This is the Level Ups. Modern business news for the future business leader - explained like your friend, not your professor.

Today: Starbucks is pouring on new changes that make pumpkin spice look like a joke.

  • Tough years call for innovation

  • Robots making coffee are slowly taking over

  • A new CEO is replacing Howard Schultz

Bonus: list of 12 active robot coffee companies (see the end of the email).

Let’s get into it.

Estimated reading time: 3 minutes & 9 seconds

Even Starbucks Can Have A Bad Year

Believe it or not, it’s been rough for the coffee giant we all know and love using as an office.

  • Starbucks is dealing with union pressure from 200 different locations (voting to unionize under Workers United).

  • China (its 2nd largest market), is under hard lockdowns with the Covid Zero policy.

  • Starbucks EBITDA* (a way of saying profits), was down 9.41% year over year (as of June 30, 2022).

  • Wait times are going up (for good reason.) There are 170,000 drink variations.

There are more issues, but I saved the big one for last.

Robots making coffee are slowly taking over.

Robots Make the Perfect Cup. Welcome to 2022.

Companies life Cafe X are revolutionizing the industry.

This machine is a robot arm that’s been “trained” to do everything from roast beans to design perfect latte art.

It’s always on time, never sick, can’t unionize, and doesn’t need time off because it’s having a “bad day.”

You can see why this is beneficial and controversial.It’s estimated that 3-4% if the American workforce is in the fast food industry.

Will these people be put out of work? Maybe.

It’s too soon to make that call. Robot baristas are not very mainstream yet, so there’s time. Give it ~5 years.

What's more interesting is that these machines are not new. The concept is over 4 years old. It’s grown enough to demand attention, but not enough to put 3% of Americans out of a job.

We are at the very start of a major turning point in humanity. Yes, it's weird, but robots making coffee is a very big deal. It's about what they represent and what may follow.

We’ll have to wait and see how the big players like Starbucks adjust. Will the coffee giant lean into robots, or find a different concept?

New leadership will have to decide.

From Condoms to Coffee.

The former CEO of Reckitt (the company that owns Durex, Lysol, and several other brands), is set to become Starbucks’ next CEO.

Laxman Narasimhan takes on the challenge of bringing a new wave of innovation.

Remember, it’s not just about money or “being faster.” Starbucks will need to reinvent the way it serves everything. Expect big changes.

While Howard Schultz’ legend status makes for big shoes to fill, Narasimhan is certainly up for it. Aside from Reckitt, he’s former Chief Commercial Officer at Pepsi, and Senior Partner at McKinsey.

His salary is estimated to reach upwards of $13.6M in total compensation if he’s successful.

I feel like he could’ve got more but that’s a conversation for another time.

Business Will Change.

Today, it’s Starbucks vs the robots.

One day, every industry will have to take on robots. It's just a matter of time.

Why is Starbucks the first to be dealing with this? Partially because the coffee industry is projecting a total value over $465 billion dollars.

But “why” is less important than “how.” Keep an eye on how Starbucks responds because it will set the global benchmark for how to innovate against machines.

If Narasimhan makes magic in the next 5-6 years, expect every major company to follow his example.

He’ll be the first major player who beat robots cutting into his market share.

It makes for a cool story (even if a little creepy).

Can’t wait to see where he takes it.

Thanks for reading!

Bonus - 12 active robot coffee companies: