Starbucks Corp. said Chief Executive Officer Kevin Johnson plans to retire next month and Chairman Emeritus Howard Schultz will return as interim CEO, retaking the reins of the company he grew from a local coffee roaster into a global phenomenon.

Johnson, 61, is stepping down on April 4 after 13 years with the company, Starbucks said Wednesday in a statement. He had signaled to the board a year ago that he would consider retirement when the pandemic neared an end, according to the Seattle-based company.

This is the second time Schultz has returned to the company’s helm. The 68-year-old is coming back amid a challenging start to the year for Starbucks, which faces rising costs and a growing unionization movement across the U.S. Schultz will rejoin the board and handle day-to-day management in addition to helping with the search for a new leader, which the company expects to be completed by the fall.

“When you love something, you have a deep sense of responsibility to help when called,” Schultz said in the statement. “Although I did not plan to return to Starbucks, I know the company must transform once again to meet a new and exciting future where all of our stakeholders mutually flourish.”

Shares of Starbucks rose 6.9 per cent at 12:05 p.m. in New York, the most since November 2020. The company is holding its annual shareholder meeting on Wednesday. Before the leadership news, the stock had fallen 29 per cent to start the year. The shares were up 42 per cent since Johnson took over as CEO in April 2017, trailing gains of about 80 per cent for competitor McDonald’s Corp. and the S&P 500 Index.

Schultz’s return is a “positive for a stock that has been under pressure,” Andrew Charles, an analyst at Cowen Inc., said in a note to clients. Charles said publicity around the unionization effort may be pushing the company to look externally for a new CEO.

It’s unclear why Starbucks didn’t have someone ready to replace Johnson permanently, given that he told the board a year ago that he might retire. The company had lost two key executives in January with the departure of Chief Operating Officer Roz Brewer and Chief Financial Officer Patrick Grismer. Brewer was later named CEO of Walgreens Boots Alliance Inc.

In December 2019, Starbucks approved long-term cash performance-based awards for Johnson and Brewer that were designed to keep them in leadership roles for at least the next three years. The CEO’s award had a target value of US$25 million, while Brewer’s had a target of US$5 million. Both had the possibility of being worth as much as double those amounts, according to a filing. Johnson’s award will be determined in September despite his departure, but the company currently doesn’t expect to pay it out, a Starbucks spokesman said.

FAMILIAR FACE

Without a clear successor, the coffee chain is returning to a familiar face with Schultz, who led Starbucks’s expansion in the ’80s and ’90s before stepping down as CEO in 2000. He returned to the role eight years later and led the company until Johnson took over. When Schultz stepped down as chairman in 2018, investors worried about the company’s future.

Under his watch, Starbucks grew from 11 stores to more than 28,000 in 77 countries. The chain has 34,000 locations now. Schultz essentially ushered coffeehouse culture into mainstream America and also took it overseas, including to Asia, where the company is still pursuing aggressive growth in China.

Expansion in China has been challenging and expensive. Pandemic restrictions have curbed sales over the past two years, albeit after strong previous growth. In December, Starbucks ordered a full inspection of all of its branches in China following reports of some restaurants using expired ingredients.

In the U.S., Schultz will have to grapple with a quickly expanding labor movement. The company has been unsuccessful in its efforts to derail counting of union ballots, and workers at six restaurants have voted to unionize so far with more than 100 store petitions pending. If the votes are certified, Starbucks will be legally required to negotiate with the union over working conditions at those locations.

RIGHT PERSON

Analysts think Schultz is the right person to see the company through these challenges, at least for now.

“Schultz puts the company in good hands until a permanent replacement can be found,” said Michael Halen, senior restaurants industry analyst at Bloomberg Intelligence. “Schultz is a great alternative to Johnson for onboarding the next CEO.”

Potential internal candidates for the top post include new operating chief John Culver and North America President Rossann Williams, according to Credit Suisse analyst Lauren Silberman.

After leaving Starbucks, Schultz considered running for president as an independent in the 2020 campaign but abandoned that pursuit in 2019 after finding it tough to capture the attention of moderate voters. The billionaire since has focused on public service and philanthropy, including the Emes Project, which aims to increase opportunity and reduce inequality in the U.S.