Starbucks keeps struggling as it waits for its new CEO’s plan to percolate
Uncool beans… Starbucks is failing to foam up growth. Yesterday the chain reported that profit fell 23% last quarter, while same-store sales sagged for the fourth straight quarter. Still, its stock rose after it beat investors’ (low) expectations. Starbs’ customers have complained about long wait times as baristas are bombarded with complicated mobile-app orders. Fed-up employees went on strike last year, shutting down hundreds of stores. But the coffee icon has high hopes for new CEO Brian Niccol, the former Chipotle chief who got his green apron in September.
New brew: In October, Starbucks suspended its annual guidance as it waited for Niccol’s comeback plan to yield results. Analysts expect to see a turnaround within quarters, not years (no pressure).
200K Sharpies… are part of Niccol’s perk-up plan. On Monday, Starbucks locations in the US and Canada rolled out changes to re-create the cozy-coffeehouse vibe that once lured customers into stores. It includes giving baristas all the markers they need to handwrite names and smileys on cups and bringing back self-serve condiment bars (milk and sugar FTW). Also new: free refills on some drinks, no upcharge for alt milks, and a “Coffeehouse Code of Conduct” that requires loiterers to purchase something or scram (no buy, no bathroom code).
Shaken espresso: Niccol’s bringing in two execs who worked with him at Taco Bell to help overhaul the java giant. Starbucks also said layoffs are likely in March.
Cream rises to the top… Niccol’s LinkedIn is stacked: Chipotle profits 7x’d under his leadership, and before that he led Taco Bell, the gem of Yum! Brands’ portfolio. Starbucks is making a big bet that he can repeat that success: it’s already awarded Niccol $96M — more than its last CEO earned in a year. He also gets to WFH from California, commuting to Seattle on a PJ. But like an $8 latte, Niccol needs to prove he’s worth the splurge.