Starbucks Aims to Reverse Decline
Starbucks is brewing up some changes in an effort to revitalize its business after a challenging year. The company has experienced a 2% decrease in global same-store sales over the past year, including a significant 7% drop in the last quarter. This decline marks the largest since 2020.
In the US and North America, full-year sales fell by 2%, while internationally they dropped by 4%. In China, Starbucks’s second-largest market, sales plummeted by 8%, with competition from local chains like Luckin Coffee and Cotti Coffee intensifying.
To steer the company in a new direction, Brian Niccol took the helm as the new CEO in September. Niccol, known for his successful leadership at Chipotle, aims to lead Starbucks through a period of transformation. In October, Starbucks announced the suspension of its sales guidance for 2025 to allow Niccol room to implement his strategic vision.
Niccol’s approach, dubbed “Back to Starbucks,” involves reintroducing popular aspects of the pre-pandemic Starbucks experience, such as the condiment bar for cream and sugar, mugs, and comfortable furniture. Baristas are also receiving 200,000 Sharpies to add a personal touch to each cup.
In an effort to streamline operations and improve the customer experience, Starbucks is removing upcharges for nondairy milk alternatives and simplifying the menu. Additionally, Niccol aims to address the challenges posed by overwhelming mobile orders by limiting online customization options.
Despite these changes, Starbucks has faced pushback from its workers, with the Starbucks Workers Union voting to strike on December 17. Baristas are demanding better pay and resolution of unresolved labor issues, even as Niccol has tripled paid parental leave for employees.
With Niccol at the helm and a series of strategic initiatives in place, Starbucks is embarking on a journey to reshape its business and reconnect with its customers on a more personal level. Time will tell how these changes will impact the iconic coffee chain.
