Starbucks new CEO Niccol to improve coffee culture at US stores

1:51 pm Tuesday, September 10th, 2024

By Juveria Tabassum

(Reuters) -Starbucks’ new CEO Brian Niccol said he would focus on reinvigorating coffeehouse culture at the chain’s stores in the U.S. as he takes the helm in the midst of patchy demand for its pricey lattes.

Starbucks named Niccol as its CEO in a surprise move last month, replacing Laxman Narasimhan after the company’s comparable sales fell for the second straight quarter this year.

In his first week at the job, Niccol said in an open letter he would initially focus on U.S. stores delivering drinks and food on time and elevating in-store experience for customers in a bid to “reestablish the brand as the community coffeehouse.”

There needs to be a clear distinction between “to-go” and “for-here” services at the stores, the former CEO at burrito chain Chipotle Mexican Grill added.

Niccol said he would spend time in stores, meeting with suppliers and partners in a bid to improve the company’s supply chain as well as its app and mobile ordering platform.

“In some places — especially in the U.S. — 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. These moments are opportunities for us to do better,” he wrote.

Starbucks deployed its Siren System plan, which includes equipment upgrades, across its U.S. company-operated stores in the summer this year to increase the pace of service.

About its business in China, Niccol said Starbucks needed to “capitalize on its strengths” in the market. Competition from more affordable brands has hurt Starbucks in that market, with comparable sales falling in the double digits for two straight quarters.

In July, Narasimhan said on a post-earnings call that Starbucks was open to looking at strategic options, including joint ventures and partnerships for its business in China.

Niccol said Starbucks would work to “dispel misconceptions” about the brand in the Middle East as Western brands take a hit from a spontaneous boycott campaign linked to the Gaza war.

Starbucks has also encountered pressure from activist investor Elliott Investment Management this year to improve its business as the company’s sales lagged.

(Reporting by Juveria Tabassum in Bengaluru; Editing by Arun Koyyur and Alan Barona)