CEO Brian Niccol is trying to revive Starbucks with comprehensive changes
Starbucks’ new CEO, Brian Niccol, plans to implement sweeping reforms at American stores to win back customers and put the company on a growth path. The new strategy was necessitated by the company’s weak quarterly results, which disappointed both the American and Chinese markets.
During Wednesday’s investor briefing, Niccol detailed the remodeling plans, which focus on creating a more comfortable cafe environment, simplifying the menu and reducing wait times. “Our financial results were disappointing and it is clear that we need to fundamentally change our strategy to win back customers and return to growth,” Niccol said.
They have been particularly challenging in China, Starbucks’ second-largest market, where sales have fallen for three consecutive quarters, with sales down 14% in the most recent quarter. Net profit fell to $909.3 million in the quarter ended Sept. 29, compared to $1.22 billion a year earlier.
Among the planned changes is the simplification of the menu: as of November 7, drinks infused with olive oil, which were introduced by Howard Schultz, the former CEO, will be removed. In addition, more comfortable seats and ceramic mugs will be added to the stores with the renovation of the cafes, while they want to reduce the waiting time to less than four minutes. As part of the new measures, the company also plans to increase staff numbers in response to complaints from baristas and the union.
Starbucks shares have rallied since Niccol’s appointment, but global sales fell 7% in its latest financial report, and North American transactions are down for the third consecutive quarter. But investors are optimistic, hoping that Niccol, who previously successfully led the turnaround of Chipotle Mexican Grill, will be able to revive Starbucks’ reputation and make the company more efficient.
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