Starbucks braces itself as Howard Schultz mulls 2020 run, prepares for Democratic backlash

By PoliticsFOXBusiness

Starbucks braces for backlash as Howard Schultz weighs 2020 bid: Charlie Gasparino

FBN’s Charlie Gasparino reports that Starbucks is bracing for a “backlash” ahead of former CEO Howard Schultz's potential run for office.

Starbucks executives have been monitoring various activist groups tied to the Democratic Party as the company’s former CEO Howard Schultz moves closer to an independent 2020 presidential run—a move that would likely spark protests and boycotts of the coffee maker, the FOX Business has learned.

Continue Reading Below

TickerSecurityLastChange%Chg
SBUXSTARBUCKS CORPORATION94.70-1.79-1.86%

Democratic activist groups have already put Starbucks on notice that if Schultz, a long-time liberal Democrat, does indeed run as an independent in 2020, the company could pay a stiff price with many consumers who believe his candidacy will siphon away voters from the Democratic nominee and help Trump win a second term.

Schultz hasn’t decided if he will enter the race, but now that he’s weeks away from any announcement, executives inside his old company are monitoring the social media accounts of activist groups that might lead a boycott, according to people with direct knowledge of the matter.

MORE FROM FOXBUSINESS.COM...

People associated with those groups, including the progressive Center For American Progress, have been mulling a boycott of Starbucks since the former CEO first spoke about the possibility in early 2019. While people inside Starbucks say they’ve seen little activity about a possible boycott more recently, they’re keeping a close eye on various groups’ social media accounts for indications of consumer boycotts if Schultz formally announces as an independent.

Starbucks “has been monitoring these types of accounts, but so far it’s been pretty quiet,” said a person with direct knowledge of the company’s activities.

Democratic Party officials tell FOX Business that Starbucks should be concerned because party activists are poised to strike if he runs. “Every activist I speak to talks about boycotting Starbucks if this guy goes through with his mid-life crisis and runs for something he can’t win,” said one political operative who asked not to be named. “If he goes through with it, there will be a backlash against him and the company.”

A spokeswoman for Starbucks declined to comment on what the company might do in the face of a boycott, but offered this statement: “As we have for the past 48 years since Starbucks was founded, we are committed to creating a great Starbucks customer experience in each of our stores. Staying focused on deepening our customer engagements has served our brand well in the past, and we are grateful to our nearly 400,000 partners who proudly wear the green apron who help us do this every day.”

A spokeswoman for the Center For American Progress didn’t return an email or telephone call for comment.

The possibility of a boycott comes as Starbuck’s stock has reached an all-time high and the company has launched a massive expansion in China, one of the world’s biggest consumer markets. Still, company officials are said to take the possibility of such protests seriously.

Analysts who cover the stock say the company is particularly vulnerable to sales pressure in the U.S. where Starbuck’s business has matured. Meanwhile, the company’s expansion in China has been facing stiff competition from a Chinese coffee company named Luckin, which is weighing an initial public offering in the U.S. securities market that would give it capital to grow even more in its home country.

Howard Penney, a managing director at Hedgeye Risk Management, noted that Schultz’s musings about running for president haven’t yet impacted the company’s sales, and certainly not its stock price, which continues to set record highs based on investor optimism over growth in places like China. But he said the issue is a “background” concern and if he does run, and the boycotts do materialize, they could have a sharp impact on U.S. sales.

Penney said he has seen surveys that showed consumer sentiment toward Starbucks declined after Schultz appeared on "60 Minutes" in January to discuss the possibility of running for president as an independent. After the broadcast, Democratic activists groups took to social media to discuss boycotting the company, which led to the dip in positive sentiment among some consumers who want to see Trump defeated in 2020

Trump is a particularly polarizing political figure, which makes him difficult for businesses to be associated with. While his approval is strong with GOP voters, he rates lower with Democrats and Independents, which has led to his historically low approval ratings. By associating Schultz and Starbucks with Trump, activist groups could easily affect the company’s bottom line, Penney says.

“If [Schultz] does run, I’m 100 percent sure this will be an issue for the company’s bottom line,” Penney said. “The U.S. business is very mature, and store traffic could slow with a boycott and impact sales and then the stock price. It’s not on the radar screen now, but if he runs and the boycotts galvanize enough people, it could hurt.”

One problem for Starbucks is that Schultz is so associated with the company -- even though he resigned as CEO in 2017, and as the company’s chairman the following year. Schultz wasn’t the company’s founder, but he is credited with its massive expansion, turning it into a corporate behemoth during his long career there.

CLICK HERE TO GET THE FOX BUSINESS APP

Schultz, a long-time Democrat, is worth an estimated $3.7 billion, according to Forbes. During his years at Starbucks, he earned the reputation for being one of Corporate America’s most progressive CEOs providing free college tuition assistance and health care benefits to nearly all employees.

His politics have shifted more recently as he has openly considered a 2020 presidential run as an independent. Schulz has criticized his old party for its recent far left tilt, where several presidential candidates have endorsed socialist policies that he believes are unaffordable including Medicaid for all and universal taxpayer financed college tuition. “The Democratic Party has shifted significantly to the left,” he said during an interview with FOX Business’ Trish Regan this week. “The Democratic Party left me, I didn’t leave them.”

He has been equally critical of President Trump, particularly on his fiscal policies and what he considers is Trump’s divisiveness. But Democratic operatives who have been most critical of Schultz’s possible run because they fear his politics are enough left-of-center that he will attract moderate Democratic voters and help Trump win re-election.

Democrats have lashed out at Schultz in recent months and as FOX Business was first to report, Schultz was “freaked out” by the criticism, which included attacks by prominent party officials.