New Starbucks CEO Brian Niccol has outlined his plan to turn around the struggling coffee giant by reestablishing the brand as a community coffeehouse. His focus will initially be on improving the delivery of drinks and food in US stores, addressing long wait times, and enhancing the in-store experience for customers. Niccol believes there needs to be a clear distinction between to-go and for-here services at Starbucks locations.
Niccol was named CEO of Starbucks last month to replace Laxman Narasimhan, who had only been in the position for less than two years. The company has faced pressure from activist hedge funds and experienced a decline in sales over several months. In his first 100 days, Niccol plans to visit stores to meet with suppliers and partners, work on the company’s supply chain issues, and improve the mobile app to better meet customer needs.
One of the main areas of focus for Starbucks under Niccol’s leadership will be to provide a more consistent and inviting experience for customers. He acknowledges that in some locations, the service can be transactional, menus overwhelming, product inconsistent, and wait times too long. By designing stores with comfortable seating and creating inviting spaces for customers to linger, Starbucks hopes to reestablish its reputation as a community cornerstone and differentiate itself in the market.
Following news of Niccol’s appointment as CEO, Starbucks shares rose 1.2%. Niccol has a successful track record of turning around businesses, as seen during his time at Chipotle where he orchestrated a successful turnaround that boosted the company’s stock by over 50% in the past year. However, the news of his hire led to a drop in Chipotle’s shares as Starbucks’ shares skyrocketed by a record percentage jump of 25%.
In addition to improvements in US stores, Starbucks also plans to focus on its international divisions, particularly in China. Niccol believes that Starbucks needs to capitalize on its strengths in the Chinese market where competition from more affordable coffee options has affected its sales. The company’s China division has seen a decline in comparable sales for two consecutive quarters. Niccol also aims to dispel misconceptions about the brand in the Middle East amidst boycott campaigns related to the conflict in Gaza.
Starbucks has also faced pressure from activist investor Elliott Investment Management to improve its business performance due to lagging sales. During the summer, the company rolled out a Siren System plan in US stores to reduce wait times and improve efficiency. Niccol’s strategic plan for Starbucks aims to address these challenges and refocus the company on what has always made it stand out in the market.
