• Starbucks (SBUX) got lazy under former CEO Kevin Johnson
• Returning CEO Howard Schultz needs to quickly find a path forward
• The path goes through China

Starbucks (NASDAQ:SBUX) Chief Executive Officer (CEO) Kevin Johnson retired last week at age 61.

I personally prefer to believe Johnson was fired for cause. I think it was the right move. I think his legendary predecessor, Howard Schultz, let him go because the company he built was getting lazy.

There was some initial shock and critical press over the move. Wall Street liked Kevin Johnson.

I think Wall Street was wrong.

Beneath a placid exterior, Starbucks is a troubled company. Its image has grown stale. Rivals are outperforming it. It needs to be shaken, not stirred. That is what Schultz does best.

Shut Up and Pour

What comes to your mind when you think of Starbucks? If it is a comfy chair, American jazz on the stereo and WiFi at your fingers, you might be a Baby Boomer.

That is not how America experiences coffee in 2022. During the COVID-19 pandemic, Starbucks went from being a service to a product, a steaming cup of sugared wake-up bought at a drive-thru window. That is where the market was. But it meant Starbucks was no longer special. Dutch Bros (NASDAQ:BROS) does drive-thru better. It is up 41% since coming public in September.

Maybe you’re thinking about an urban setting, a college campus, smart people murmuring softly. A big hunk of the market doesn’t like that. Since going public in February, Black Rifle Coffee (NASDAQ:BRCC) is up 70%, selling a different cultural version of that experience.

Under Johnson, Starbucks set a careful plan to raise barista wages to $15 per hour.  The company also offers free college tuition, at least online tuition through Arizona State. Workers reacted by unionizing.

Investors know that Starbucks has lost its way, even if analysts don’t. Shares are down 28% so far in 2022. That brings the price to earnings ratio down to 22.46 and the dividend’s yield up to 2.35%.

If Starbucks can be fixed, the stock is a bargain.

An Inauspicious Start for SBUX Stock

Schultz faces a far more skeptical reception than the last time he re-entered management in 2008. A man with notorious self-regard, he even made a presidential run. It was laughed at. Schultz is now 68. To some he looks like yesterday’s man. 

His opening act has not been auspicious. He called unionization efforts a “threat.” He ended the stock buybacks that were keeping the stock price up. He said the company would start selling non fungible tokens (NFTs).  He wants to get rid of the company’s white paper cups, but hasn’t proposed an alternative.

On resuming his chair, Schultz wrote a vague letter promising a heavy travel schedule, “to co-create a future of mutual thriving in a multi-stakeholder era.” If you can figure out what that means, then you’re smarter than I am.

Bottom Line on SBUX Stock

Starbucks is now a global brand, like Coca-Cola (NYSE:KO). Coke once represented Atlanta, but as it became global, its leadership did too. For over 40 years now, starting with Roberto Guizueta, its leaders have come from outside the U.S.

There is a Guizueta at Starbucks. Her name is Belinda Wong.  Officially, she is chairman of Starbucks China.

Under Wong, Starbucks China has grown to 5,358 stores, all company-owned. No western company has been as successful in this particular space.

Wong played a long game at Starbucks China. She offers insurance to employees and their families. She started a support program for Chinese coffee growers. She is building an “Innovation Park,” which is due to open next year.  She is a native of Hong Kong and graduated from the University of British Columbia, not far from Seattle.

Wong can, and should, be Starbucks’ Guizueta, as Schultz has been its Robert Woodruff. If Schultz can get her into the job, I’d be a buyer of Starbucks stock. I’d buy it with both hands.

On the date of publication, Dana Blankenhorn held no positions in companies mentioned in this story. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.