Brian Niccol, CEO of Starbucks
Anjali Sundaram | CNBC
Starbucks CEO Brian Niccol shared more details about the company’s turnaround strategy during the company’s quarterly conference call on 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 plan.
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.
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.
Shares of Starbucks were flat in extended trading Thursday after the company reported that its revenue fell for the third straight quarter.
Here’s how Niccol plans to help Starbucks’ sales rebound:
Ending the disorder of mobile order and pay
Cutting back an ‘overly complex’ menu
Making cafes more personal
In recent years, the company has rolled out more pickup-only locations, with little to no seating, particularly in urban areas. Niccol said even those cafes could be more welcoming to customers.
“I think there are design elements that can still bring forward this idea of a community coffeehouse, even in some of the executions that we’ve made that just don’t lend itself to putting the full, traditional coffeehouse experience,” he told CNBC.
Bringing back the condiment bars
Better staffing in cafes
A new approach to marketing
Niccol comes from a marketing background and started his career at Procter & Gamble. He then moved to Yum Brands and worked in various marketing positions before ascending to lead Taco Bell. That marketing expertise was useful when he joined Chipotle and will likely also prove valuable at Starbucks. He’s already tapped a former Chipotle alum, Tressie Lieberman, as the new chief global brand officer of Starbucks.
Dairy alternatives finally won’t cost extra
After years of pleading from customers, Starbucks will finally drop the extra charge for 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.
Almond milk coming to certain Starbucks locations in the U.S. by the end of September.
Source: Starbucks
More broadly, Starbucks isn’t planning to change North American prices through the next fiscal year, which ends around early October, in the hopes of improving consumers’ perception of its pricing.
Executives have pointed to pushback against higher prices as one reason why occasional customers have stopped visiting its locations as often.