Starbucks CEO Reveals Strategy to Fix Coffee Chain’s Woes

• Starbucks CEO Brian Niccol just laid out his plan to turn around the struggling coffee chain.
• “It is clear we need to fundamentally change our strategy to win back customers,” he said Wednesday.
• The company released preliminary numbers last week, which showed a big drop in traffic.

Starbucks CEO Brian Niccol gave investors the first look at his plan to turn around the struggling chain, and it involves faster coffee orders and better decor.

“It is clear we need to fundamentally change our strategy to win back customers,” Niccol said in the company’s earnings call Wednesday, his first call since joining the company last month. “My experience tells me that when we get back to our core identity and consistently deliver a great experience, our customers will come back.”

The company released some quarterly numbers last Tuesday, about a week early, which showed a 6% decline in comparable sales in the US and a 14% decline in China. At the same time, it suspended its guidance for the coming fiscal year, citing the CEO transition and the state of the business.

For starters, Niccol said in-store orders would need to be fulfilled much faster than they currently are in many cases.

“I’m putting a full-court press on solving four minutes,” he said.

One way he said this would happen is by bringing back the condiment bar to company-owned locations by early 2025, allowing cups of brewed coffee to skip the queue of more-complex orders.

Niccol also said the chain would stop charging extra for non-dairy milk, which he said was the second-most-popular drink modification after an extra shot of espresso.

He highlighted several changes he wanted to bring back in an effort to “reclaim the third place” and make the cafés a place to hang out with a cup of coffee, including comfy seating, ceramic mugs, and Sharpie markers for baristas to add “that additional human touch” to orders.

Several other initiatives were reported in the days before Wednesday’s call, including a requirement that corporate employees work in the office at least three days a week and a menu shake-up that will end the brand’s olive-oil-infused coffee offerings.

Since taking over the job in September, Niccol has focused on simplifying Starbucks’ US menu and operations, including pivoting away from the chain’s emphasis on promotions, drive-thru, and mobile ordering.

“Mobile orders are a huge problem because you could have 20 people place a mobile order at the same time, and then they all come through at once,” a barista in North Carolina told Business Insider in August.

That deluge of orders has contributed to long wait times and an impersonal atmosphere in cafés that Niccol has said he wants to fix.

Niccol hinted that “guardrails” in mobile ordering were in the works, saying that the current system invites overly complicated orders that aren’t necessarily the best execution of the drink.

While Niccol didn’t deeply address Starbucks’ China segment, he said the company was facing twin challenges of an economic slowdown and rising competition from Chinese brands.

“Before discussing China in detail, I need to spend time there to better understand our operations and the market,” he said.

Niccol said his optimism was rooted in Starbucks employees, whom he said were passionate about coffee, the company, and its customers.

“When you start with that kind of foundation, you know, you’re able to put in the right programs so that we can get the business turned around,” he said.

Correction: October 31, 2024 — Because of an editing error, an earlier version of this story misstated when Starbucks released its most recent quarterly numbers. It was last Tuesday, not last Wednesday.