Even As Starbucks Profits Plunge Amid Mounting Turnaround Costs, Niccol Says Price Hikes Are Last Resort – CoffeeTalk

Starbucks CEO Brian Niccol has stated that price changes are the last resort for Starbucks’ CEO, Brian Niccol, as part of his revitalization efforts. He has led successful revitalization campaigns at Taco Bell and Chipotle, and his “Back to Starbucks” campaign is proceeding ahead of schedule. However, he will not rule them out as part of his revitalization efforts.

Since taking over, Starbucks has already implemented changes to its pricing model, including removing surcharges for non-dairy milk substitutes and changing the pricing structure for syrups and powder add-ins. It is unclear when any additional price changes may take place or what menu items may be affected.

Starbucks reported a decline in sales for the sixth consecutive quarter while the company continues its turnaround plan. Global comparable store sales declined 2% overall, driven by a 2% decline in comparable transactions. The decline was partially offset by a 1% increase in the average ticket price. Most of the decrease was seen in North American markets, as international comparable store sales were mostly flat.

The company’s revenue grew by 4% to $9.5 billion, beating analysts’ tepid expectations. However, it missed on earnings, with an adjusted EPS of $0.50, a 46% decline over the prior year, missing estimates of 65 cents. Starbucks’ stock increased more than 3.5% in after-hours trading following the earnings call.

Niccol’s preferred turnaround method starts with customer service, making the chain’s new Green Apron Service model the heart of the revitalization campaign. The foundational operating model, focused on crafting cravable coffees and enhancing consumer connection, is being rolled out early across stores nationwide after being tested in pilot stores. Coffee houses already using Green Apron Service techniques have driven improvements in transactions, sales, and customer service times, outperforming the broader North American portfolio.

Niccol’s “Back to Starbucks” campaign aims to improve slumping sales and customer experience complaints that have plagued the international coffee giant. Starbucks has since rolled out a series of changes in-store, including remodeling stores with comfy chairs and ceramic dishes to encourage visitors to stay longer, bringing back the self-serve condiment bar, and asking baristas to hand-write smiley faces and inspirational messages on to-go orders.

On the corporate side, the company has cracked down on its return-to-office mandate, requiring most support staff to work from the Seattle headquarters or Toronto office four days a week or leave the company.

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