Starbucks CEO Brian Niccol’s Turnaround Plan Will Be No Quick Fix – CoffeeTalk

Starbucks’ new CEO, Brian Niccol, has outlined a four-part “Back to Starbucks” turnaround plan that aims to improve the company’s long-term financial performance. The plan includes redesigned stores with updated aesthetics, more comfortable seating, and the return of ceramic mugs and condiment bars. Starbucks also wants to complete orders in four minutes or less to boost customer satisfaction and throughput, especially in the morning.

The changes include installing condiment bars to reduce the labor burden on baristas, simplifying the brand’s complex menu and pricing, including no additional charge for milk alternatives, and accelerating its kitchen redesign rollout, dubbed the Siren System. Starbucks may also add labor to ensure it can serve customers quickly, as detailed in a September letter to employees and customers.

The updated equipment and drink-building process redesign could be a gamechanger, as analysts say it could help Starbucks provide a premium experience and a healthy mix of hot and cold beverages. However, Starbucks must avoid oversimplifying its menu to ensure it can still provide a premium experience and a healthy mix of hot and cold beverages.

Starbucks plans to add Clover Vertica drip-coffee brewers to all its U.S. stores by the end of 2025, have cashiers give brewed coffees directly to customers, and separate its mobile-order-and-pay experience from its in-store experience. The company is also accelerating its kitchen redesign rollout, dubbed the Siren System, and related service and drinks-building processes under the Siren Craft System. Starbucks may also add labor to ensure it can serve customers quickly, as detailed in a September letter to employees and customers.

The changes should provide much-needed relief to workers at Starbucks’ stores who have struggled in recent years due to greater ice beverage consumption, the rise of mobile-order-and-pay, and increasing order complexity. However, it is unclear what Starbucks will do to “rein in” order modifications, which have risen alongside the proliferation of elaborate drinks on social media platforms like Instagram.

Simplifying its operations should also help the company grow again, but the changes will take time. Starbucks will spend more on marketing to get lapsed customers to return to its stores while reducing how much it spends on promotions, which is already low by industry standards.

Although Starbucks will need at least a couple of years to implement its turnaround plan, the company would likely benefit from its strong brand, a long-term increase in U.S. coffee consumption, and declining at-home coffee consumption. Starbucks’ new Iced Lavender Cream Oatmilk Matcha and Iced Lavender Oatmilk Latte are part of this strategy.

Iced coffee is often more profitable than hot coffee because the serving sizes are larger, and much of the additional volume is ice, which is far less expensive than coffee. The percentage of consumers that prefer iced to hot coffee grew from 18% in 2021 to 27% in 2023, with Gen Z consumers driving the trend. Rising coffee bean prices are likely to lower at-home consumption further as producers raise prices to offset increasing costs.

Starbucks needs to overhaul its 10,000 company-owned stores to capitalize on the iced coffee trend, as the bulk of its stores are still hot beverage manufacturing plants. Digital ordering and Starbucks Rewards should also help the company grow its business, as younger consumers are more likely to use mobile-order-and-pay and participate in app-based loyalty programs. Despite these challenges, overcoming one of the coffee giant’s biggest challenges could prove fickle.

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