New Starbucks boss Brian Niccol on Tuesday outlined his plan to turn around the struggling java giant – vowing to “reestablish the brand as the community coffeehouse.”
In his first week at the helm, Niccol said in an open letter he would initially focus on US stores delivering drinks and food on time and elevating in-store experience for customers, many of whom have griped about long wait times for their pricey lattes.
There needs to be a clear distinction between “to-go” and “for-here” services at Starbucks locations, the former CEO at burrito chain Chipotle Mexican Grill wrote.
Starbucks named Niccol as its CEO last month to replace Laxman Narasimhan less than two years after he was hired for the top job. The company faced intensifying pressure from activist hedge funds and a monthslong sales decline.
Niccol said he would visit stores to meet with suppliers and partners in his first 100 days in order to work out kinks in the company’s supply chain and mobile app.
“In some places – especially in the US – we aren’t always delivering. It can feel transactional, menus can feel overwhelming, product is inconsistent, the wait too long or the handoff too hectic,” Niccol wrote. “These moments are opportunities for us to do better.”
The company will make sure stores are designed with comfortable seating and “inviting places to linger” to re-establish its reputation as a community cornerstone, Niccol said.
“We’re getting back to Starbucks,” he said. “We’re refocusing on what has always set Starbucks apart.”
Starbucks shares rose 1.2% on Tuesday.
Niccol has been widely praised for orchestrating a turnaround at Chipotle that boosted the burrito chain’s stock by more than 50% over the past year.
Starbucks shares rose 25% – a record percentage jump – on the news of his hire, while Chipotle shares dropped.
Over the summer, Starbucks deployed a Siren System plan – which includes equipment upgrades – across US stores to help cut down wait times and boost efficiency.
Niccol also mentioned improvements to be made in its international divisions.
He said Starbucks needs to “capitalize on its strengths” in its China business, as competition from more affordable coffee rivals has damaged Starbucks’ share of that market. Its China division’s comparable sales have fallen for two straight quarters.
Niccol said Starbucks will also try to “dispel misconceptions” about the brand in the Middle East as boycott campaigns linked to the war in Gaza have targeted the coffee chain.
Starbucks has also encountered pressure from activist investor Elliott Investment Management this year to improve its business as the company’s sales lagged.
With Post wires
