The business stories that matter, by Fortune's Colin Barr
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January 7, 2008, 5:17 pm

New sergeant at Starbucks

The coffee wars are really heating up now. Starbucks (SBUX), under fire for the last year as rivals like McDonald’s (MCD) took aim at the expensive-coffee market, late Monday said Chairman Howard Schultz, who ran the company between 1987 and 2000, will return to grab the reins as CEO. He’ll replace Jim Donald, whose many stumbles included the inexplicable claim last year that he welcomed McDonald’s arrival in the market. In addition to putting Schultz back in charge, Starbucks is taking a page out of Wal-Mart’s (WMT) by slowing its U.S. store growth, and emulating McDonald’s by promising to put the customer first once again. The company says the changes will have the effect of “refocusing the company on providing customers with the distinctive Starbucks Experience [italics theirs] and building on Starbucks legacy of innovation.” With the stock up 7 percent late Monday, it’s hard to argue with the decision - even if providing customers a better experience will be more difficult than talking up the Starbucks Experience.

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Colin Barr covers business and finance for Fortune.com. Previously he was an editor at TheStreet.com and author of the weekly Five Dumbest Things on Wall Street column, and an editor at Dow Jones Newswires.
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