Starbucks CEO Brian Niccol announced a significant overhaul of the company’s U.S. locations during a presentation to investors. The proposed changes include the introduction of more comfortable seating, the use of ceramic mugs for customers dining in, and the establishment of a coffee-condiment bar. A key goal of the initiative is to reduce customer wait times to under four minutes.
The announcement comes as Starbucks grapples with declining demand for its premium beverages in critical markets, including the U.S. and China, and as its share price experiences a downturn. Investors are looking to Niccol, who took the helm in August, to lead the company back to a path of growth.
In light of disappointing financial results, Starbucks recently suspended its forecasts for the 2025 fiscal year. “Our financial results were very disappointing, and it is clear we need to fundamentally change our strategy to win back customers and return to growth,” Niccol stated.
To improve service efficiency, Niccol emphasized the need to make the coffee-buying experience easier for customers. He also highlighted plans to simplify the menu in order to clarify pricing, which aims to further enhance customer satisfaction. Additionally, he suggested that staffing levels may increase, addressing long-standing concerns from baristas and the Starbucks Workers United union, which is advocating for worker organization. “I want to make sure that the teams are staffed to win every transaction,” he remarked.
Investors are optimistic that Niccol, who has extensive experience as a former executive at Chipotle Mexican Grill, will streamline the company’s leadership and operational structure while rejuvenating the coffee-house culture at Starbucks locations across the U.S.
Changes will also include the provision of ceramic mugs for customers choosing to dine in, and a restructuring of the order process to differentiate between pick-up and sit-down orders. Niccol announced plans to implement “common sense guardrails” for mobile ordering to improve service.
Since Niccol’s appointment, Starbucks shares have risen approximately 26%, although they remained stable in after-hours trading on Wednesday.
Starbucks reported a 7% decline in global comparable sales for the fourth quarter, following preliminary results released last week for the quarter ending September 29. The number of comparable transactions in North America has now decreased for three consecutive quarters.
The company’s strategy of driving demand through promotions and enhancements to its loyalty program has struggled to resonate with cost-conscious consumers. Niccol acknowledged that the marketing efforts have overly focused on rewards members, leading to stagnant growth in the loyalty program, which saw no increase in 90-day active members in the U.S. during the fourth quarter. This follows a 3% increase reported in the third quarter.
In addition to challenges in the U.S., Starbucks faces stiff competition in China, where it is navigating a sluggish macroeconomic recovery. Comparable sales in China, the company’s second-largest market, have fallen for three consecutive quarters, plunging 14% in the fourth quarter.
International comparable sales also took a hit, decreasing by 9% in the fourth quarter, exceeding analysts’ expectations of a 6.5% decline, according to data from LSEG.
The company’s net income dropped to $909.3 million, or 80 cents per share, down from $1.22 billion, or $1.06 per share, during the same period last year.
In terms of menu updates, Starbucks is set to remove its olive-oil-infused drinks from the menu on November 7. This decision was made prior to Niccol’s tenure as CEO, although it had been previously championed by former CEO Howard Schultz.
Related Topics:
Coffee with a Cause: Join Breakthrough’s Mission to Fund Cancer Research
Starbucks Shutters Over 100 Outlets in Malaysia Amid Global Boycott
Halloween Hues and New Friends: Join the Coffee Connections