December 3, 2024
Energy

Plans underway to pause price increases, remove iced energy drink, make coffee in 4 minutes or less


It’s day 51 for Starbucks (SBUX) CEO Brian Niccol, and he’s knee-deep in tackling the biggest problems facing baristas, customers, and investors.

High prices, an overly complex menu, and speed of service are at the top of his to-do list. Niccol, who has been talking to baristas while visiting key markets like New York, Dallas, and Chicago, said the chain failed to listen to its customers in recent years.

“It was really clear, both from our partners and our customers, [there are] things that would make my experience at Starbucks better, and frankly, these are things you used to do,” Niccol told Yahoo Finance in a call late Wednesday following earnings being released.

The former Chipotle CEO, who took the helm in September, aims to invigorate sales growth for the 53-year-old company after another quarter of disappointing results. Starbucks stock has gained 4% year to date, far behind the S&P 500’s (^GSPC) 23% advance.

Shares of the coffee chain fell slightly in early trading on Thursday.

Niccol is setting a goal for customers to get in and out with a good experience in four minutes or less. “We’re going to be maniacal about getting after it,” he said on the Q4 earnings call on Wednesday. He’s returning condiment bars to all cafes in 2025 after they were moved behind counters during the pandemic.

Pricing is another area of focus. Starbucks announced it will no longer up-charge for non-dairy milk, something Niccol heard was a key issue for customers (though, personally, his go-to order is a black Americano or regular black coffee.)

The chain also plans to pause price increases as it struggles with value perception.

“We’re definitely hitting the pause button for this year,” Niccol said. “Longer term, you probably will need the pricing [increase] … Hopefully, inflation stays under control, where you can do more [of] the traditional 1% to maybe 2%.”

Close-up of a Starbucks Summer Skies drink, a new drink featuring coconut milk and boba pearls, in Lafayette, California, May 10, 2024. (Photo by Smith Collection/Gado/Getty Images)
Close-up of a Starbucks Summer Skies drink, a new drink featuring coconut milk and boba pearls, in Lafayette, Calif., on May 10, 2024. (Smith Collection/Gado/Getty Images) · Smith Collection/Gado via Getty Images

Simplifying the menu is another initiative for Starbucks as it focuses on its core coffee business. That means no more iced energy drinks, which launched in June of this year.

Making the drink doesn’t fit well with Starbucks’ other beverages. “We shouldn’t be cracking cans behind the counter,” Niccol explained.

He added that some products were not created with the “four-minute in-cafe experience” he has in mind or don’t work well for mobile orders. The olive-oil infused coffee line, Oleato, added under founder and former CEO Howard Schultz, will also be taken off the menu in the US.





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