Starbucks CEO Seeks to Reverse Sales Slump With Revamp Plan

A Starbucks logo hangs in the window of one of the chain's coffee shops in the Loop in Chicago on Jan. 4, 2022. Scott Olson/Getty Images

Starbucks CEO Brian Niccol, who stepped into the role on Sept. 9, has laid out a plan to revitalize the company’s U.S. operations after two quarters of declining sales, citing concerns that the coffeehouse has lost some of its charm.

In an open letter on Sept. 10, Niccol acknowledged that while many customers still experience the “magic” of Starbucks—which he described as a sense of “connection and joy”—there has been a growing wave of dissatisfaction regarding inconsistent service, long wait times, and uneven product quality.

“Many of our customers still experience this magic every day, but 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,” he wrote. “These moments are opportunities for us to do better.”

Niccol’s overhaul focuses on improving morning service, making it a more appealing place to work for baristas, and enhancing the store environment to make it inviting for customers to linger—all while reinforcing Starbucks’s identity as a community hub.

“We’re refocusing on what has always set Starbucks apart—a welcoming coffeehouse where people gather and where we serve the finest coffee, handcrafted by our skilled baristas,” Niccol said.

Starbucks faces increasing competition and operational challenges this year. In the second and third fiscal quarters of 2024, Starbucks saw its comparable sales in the United States slump by 3 percent and 2 percent respectively.

Comparable sales are a key retail metric that looks at sales at existing stores.

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

As the former Chipotle CEO, Niccol is widely credited with helping revitalize that brand through a focus on culture and operational improvements.

Chipotle’s annual sales surged since he joined in 2018 and the company’s stock has more than tripled over the past five years.

“This is a significant victory for Starbucks. Niccol has earned the respect and confidence of the investment community and will be given the much-needed leeway to make investments and time to turn around Starbucks,” according to BTIG analyst Peter Saleh.

To support the Starbucks overhaul, Niccol on Tuesday announced significant investments in technology, including upgrades to Starbucks’s mobile ordering platform, supply chain, and in-store systems.

While his initial focus is on the United States, Niccol said he intends to broaden the strategic revamp to include international markets, where he sees “enormous” growth potential.