Starbucks\u00a0CEO\u00a0Brian Niccol\u00a0shared more details about the company\u2019s turnaround strategy during the company\u2019s\u00a0quarterly conference call\u00a0on Wednesday.<\/p>\n
For three straight quarters, Starbucks has reported declining sales. But the coffee chain is hoping that some easy tweaks to its U.S. business will pay off and help reverse the trend as it plots a more ambitious and comprehensive game plan.<\/p>\n
Many of the coming changes are meant to help Starbucks achieve a smaller goal: delivering a customized drink to the customer in under four minutes. About half of current transactions are within that threshold, according to Niccol.<\/p>\n
As Starbucks focuses on the turnaround, the company is also planning fewer new locations and renovations in fiscal 2025 to free up capital, CFO Rachel Ruggeri told investors on the call.<\/p>\n
Shares of Starbucks were flat in trading Thursday after the company reported that its revenue fell for the third straight quarter.<\/p>\n
Here\u2019s how Niccol plans to help Starbucks\u2019 sales rebound:<\/p>\n
Starbucks customers have become used to walking into a cafe and seeing a counter crowded with mobile orders. Niccol wants to change that.<\/p>\n
\u201cWhen it works well, it\u2019s great, but sometimes it can be a challenge for both customers and partners,\u201d he told investors on the company\u2019s conference call.<\/p>\n
Mobile orders account for more than 30% of Starbucks\u2019 U.S. transactions.<\/p>\n
Niccol said Starbucks is working to improve the accuracy of the app\u2019s timing, so customers know when their drinks are ready. Plus, he wants to better separate mobile order pickups from in-person ordering inside restaurants and curtail how much customers can customize their drinks.<\/p>\n
\u201cRight now, I think there\u2019s some customization specifically in the mobile order app execution that\u2019s just really wide and unnecessary,\u201d Niccol told CNBC. \u201cSo I just think that we need to put better guardrails in place so that we get you access to customization that\u2019s correct for the drink you\u2019re ordering, and then also it allows our baristas to be more consistent with what they execute.\u201d<\/p>\n
The Starbucks menu will be getting a makeover.<\/p>\n
Niccol said the coffee chain needs to focus on \u201cfewer, better\u201d offerings. Slimming down the menu will make it easier for baristas to make every drink consistently. It should also improve speed of service since they\u2019ll have fewer drink recipes to remember.<\/p>\n
\u201cThere\u2019s always a long tail on the menu, and those items, frankly, we don\u2019t execute all that great,\u201d Niccol said, adding that baristas often take longer to make drinks that are unfamiliar.<\/p>\n
Niccol said Starbucks would also be taking a look at the items that it wouldn\u2019t have put on the menu if the four-minute standard was already in place.<\/p>\n
While the changes may disappoint some customers, Niccol said he thinks that they\u2019ll appreciate faster, more consistent service in the long run.<\/p>\n
As part of Niccol\u2019s \u201cBack to Starbucks\u201d plan, he wants the company\u2019s locations to feel like \u201cthird places\u201d for customers to work and socialize in outside of their homes and offices.<\/p>\n
The coffee chain\u2019s positioning as a \u201cthird place\u201d helped it grow into a global behemoth, but somewhere along the way, it lost that reputation. Niccol said he wants to reintroduce more personal touches, like serving coffee in ceramic mugs to customers who choose to linger in cafes. Sharpies will also be making their triumphant return, after being supplanted by printed labels.<\/p>\n
Starbucks is also reviewing its store designs, with a focus on bringing back more comfortable seating and amenities.<\/p>\n
\u201cThe reality is the majority of what we have are these cafes that I think don\u2019t have the right seats, potentially have the right texture, don\u2019t have the right layers, don\u2019t have the right warmth. We need to bring that back,\u201d Niccol said.<\/p>\n
In recent years, the company has rolled out more\u00a0pickup-only locations, with little to no seating, particularly in urban areas. Niccol said even those cafes could be more welcoming to customers.<\/p>\n
\u201cI think there are design elements that can still bring forward this idea of a community coffeehouse, even in some of the executions that we\u2019ve made that just don\u2019t lend itself to putting the full, traditional coffeehouse experience,\u201d he told CNBC.<\/p>\n
In the early days of the Covid pandemic, Starbucks banished its condiment bars behind the counter. Since then, when customers want to add milk or sugar to their drinks \u2014 even a simple drip coffee \u2014 they have to ask baristas directly.<\/p>\n
But that will change soon. Niccol said the condiment bars will reappear, freeing up more time for baristas and easing some customer headaches.<\/p>\n
Starbucks has already been increasing the average number of hours that it schedules baristas. More shifts \u2014 and more consistent scheduling \u2014 have lowered the company\u2019s turnover and helped overall retention.<\/p>\n
But Niccol also wants to make sure that cafes are properly staffed, from the busy morning rush to \u201cshoulder hours,\u201d leading up to and away from peak times.<\/p>\n
Since his first week on the job in early September, Niccol has said that he wants to revamp the company\u2019s marketing. On Wednesday\u2019s call, he said he wants its marketing to target a broader audience than Starbucks Rewards members and to showcase the quality of Starbucks coffee.<\/p>\n
Customers can also expect to see fewer deals as part of the marketing shift. Niccol said discount-driven offers are \u201cineffective\u201d and can overburden baristas.<\/p>\n
Niccol comes from a marketing background and started his career at\u00a0Procter & Gamble. He then moved to\u00a0Yum Brands\u00a0and worked in various marketing positions before ascending to lead Taco Bell. That marketing expertise was useful when he joined\u00a0Chipotle\u00a0and will likely also prove valuable at Starbucks. He\u2019s already tapped a former Chipotle alum,\u00a0Tressie Lieberman, as the new chief global brand officer of Starbucks.<\/p>\n
After years of pleading from customers, Starbucks will finally\u00a0drop the extra charge\u00a0for its milk substitutes, starting Nov. 7. The change means some customers could save more than 10% on the cost of the drinks, according to the company.<\/p>\n
More broadly, Starbucks isn\u2019t planning to change North American prices through the next fiscal year, which ends around early October, in the hopes of improving consumers\u2019 perception of its pricing.<\/p>\n
Executives have pointed to pushback against higher prices as one reason why occasional customers have stopped visiting its locations as often.<\/p>\n<\/p>\n
Starbucks\u00a0CEO\u00a0Brian Niccol\u00a0shared more details about the company\u2019s turnaround strategy during the company\u2019s\u00a0quarterly conference call\u00a0on Wednesday. For three straight quarters, Starbucks has reported declining sales. But the coffee chain is hoping that some easy tweaks to its U.S. business will pay off and help reverse the trend as it plots a more ambitious and comprehensive game […]<\/p>\n","protected":false},"author":0,"featured_media":11864,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-11863","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business"],"_links":{"self":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/11863","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/comments?post=11863"}],"version-history":[{"count":0,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/11863\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media\/11864"}],"wp:attachment":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media?parent=11863"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/categories?post=11863"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/tags?post=11863"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}