Starbucks CEO Brian Niccol is planning to overhaul the company’s US locations, aiming to improve customer experience by adding more comfortable seating, ceramic mugs, and a coffee-condiment bar, while also ensuring customer wait times are less than four minutes. Investors are hoping Niccol’s changes will help steer the company back to growth amid falling demand for Starbucks beverages in the US and China markets and a decline in share prices. The company has suspended its forecast for its 2025 fiscal year due to disappointing financial results.
Niccol expressed his desire to make it easier for customers to get a cup of coffee, aiming to reduce wait times and simplify the menu to make prices clear. He also mentioned the possibility of increasing staffing levels to facilitate smoother operations and address concerns raised by Starbucks Workers United, a group seeking to unionize Starbucks workers. Investors are optimistic that Niccol, a seasoned industry veteran, will streamline the company’s leadership and operating structure while revitalizing the coffee-house culture at Starbucks US stores.
To enhance the customer experience, Starbucks plans to offer ceramic mugs to customers staying in the café and separate pick-up orders from sit-down orders over the coming months. Niccol emphasized the implementation of “common sense guardrails” on mobile ordering to improve efficiency and prevent disruptions. Since Niccol took over as CEO in August, shares of the company have risen by about 26%, reflecting investor confidence in his ability to drive positive change within the company.
Starbucks reported a 7% drop in global comparable sales for the fourth quarter, with North American transactions declining for the third consecutive quarter. Despite efforts to boost demand through promotions and loyalty programs, the company has struggled to attract cost-conscious consumers. Niccol acknowledged that focusing marketing efforts solely on rewards members had been a mistake and suggested a need to broaden the company’s approach.
While Starbucks faces challenges in China, including a slow macroeconomic recovery and strong competition from local brands, the company’s international performance has also suffered. Comparable sales in China declined for three straight quarters, while global sales fell by 9% in the fourth quarter. The company’s net income also decreased in the fourth quarter, emphasizing the urgent need for strategic changes to drive growth and improve financial performance.
In response to the changing market landscape, Starbucks is planning menu simplifications, including the removal of olive-oil-infused drinks introduced under former CEO Howard Schultz. These changes are part of Niccol’s broader strategy to revamp Starbucks’ offerings, streamline operations, and refocus on customer satisfaction to regain market share and drive sustainable growth in key markets like the US and China.
