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Ceramic mugs, the return of cups labelled by Sharpie pen and a menu price freeze were among plans detailed by Starbucks’ new chief executive on Wednesday as he attempts to stem a sharp decline in customer traffic.
Brian Niccol outlined the changes in his inaugural call with Wall Street analysts after his arrival last month at the world’s largest coffee chain, which has suffered a dismal year marked by contracting sales.
Niccol has said Starbucks needs to get back to its roots as a coffee house where people linger, while rethinking its pricing and whittling down an “overly complex” menu, which slows down service and stresses out baristas.
On Wednesday he for the first time spelled out how he would begin to address these concerns, with a particular focus on its US stores.
For customers who want to linger in its cafés, he said Starbucks would prioritise service in ceramic mugs. Baristas would also once again write order information on paper cups in the thick ink of a Sharpie pen.
“What I’ve heard is people like the humanity of it, and our baristas like having that personal touch. Look, I want to empower them to give the hospitality and the personal touch that they want to provide,” Niccol said in an interview with the Financial Times.
Niccol announced the moves after Starbucks suffered a 6 per cent decline in US same-store sales in the three months to September, with the number of transactions falling by a tenth. Meanwhile, the average customer’s bill rose 4 per cent. Morgan Stanley called it “a remarkably poor quarter, no matter how one cuts it”.
In a move aimed at cost-sensitive customers, Starbucks said it did not intend to raise menu prices at company-owned North American stores over the rest of the current fiscal year. Just over 11,000 of its more than 18,000 stores in North America are company-owned.
Next month it will end price mark-ups for adding non-dairy milk to drinks such as lattes and cappuccinos served in its US and Canadian cafés. The change, which will apply to company-owned stores, will lower prices by more than 10 per cent for patrons who ask for non-dairy alternatives such as soy milk, oat milk or almond milk in their beverages.
Niccol was hired away from restaurant chain Chipotle Mexican Grill to revive Starbucks’ fortunes. Investors have pinned hopes on his leadership, sending the coffee chain’s shares up more than 25 per cent since his appointment was announced in mid-August.
After an initial fall, the shares were up marginally in after-hours trading on Wednesday after Starbucks published more information on quarterly financial results first released last week.
“We’re working to make every visit is worth it for our customers with straightforward pricing, timely service, and a more consistent, enjoyable café experience,” Nicoll told analysts.
In another menu-simplifying move, Starbucks next month will stop selling olive oil infused coffees that were the creation of Howard Schultz, the longtime leader who built Starbucks. The company said the decision was taken before Niccol’s arrival.
Niccol said he had spoken to Schultz since joining. “He founded the company, created an amazing brand and business, and you know what, he’s been a great resource,” he said in the interview.
Torrents of orders made through mobile devices have sometimes slowed down service at busy times of day. Niccol said he intended to have drinks delivered within four minutes to customers in its cafés, and would create separate pick-up areas for mobile customers.
Niccol had previously outlined his plan, which he calls “Back to Starbucks”, in broader strokes.
In an open letter last month, he said Starbucks outlets had drifted away from their roots as inviting community hubs and sometimes felt transactional and hectic. Waiting times for drinks had lengthened and the list of drinks and foods had become overly complicated, he said.
In a video released with last week’s dismal results, Niccol said Starbucks’ strategy needed a “fundamental change”.
