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

10/31/2024 07:17
Starbucks CEO: Plans underway to pause price increases, remove iced energy drink, make coffee in 4 minutes or less

New Starbucks CEO Brian Niccol is trying to tackle baristas, customers, and investors' biggest problems as the chain reports disappointing Q4 results.

It's day 51 for Starbucks 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.

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. Its shares have gained 4% year-to-date, far behind S&P 500's (^GSPC) 23% advance.

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 moving them to behind the counters during the pandemic.

Pricing is another area of focus. Starbucks announced it will no longer up-charge for non-dairy milks, something Niccol heard was a key issue for customers (though personally, his go-to 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, California, May 10, 2024. (Photo by Smith Collection/Gado/Getty Images) · Smith Collection/Gado via Getty Images

Simplifying the menu is another initiative as Starbuck focuses on its core coffee business. That means no more iced energy drinks, 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 doesn't work well for mobile orders. The olive-oil infused coffee line, Oleato, discovered under founder and former CEO Howard Shultz, will also be taken off the menu in the US.

But one recent addition will stay — boba like pearls.

"Pearls, I think is interesting. There's definitely a trend for textured drinks, or having adding texture into drinks," he said. Starbucks plans to push out new launches less frequently, and is assessing and simplifying its food offerings as well.

Starbucks names Brian Niccol Chairman and CEO, here's a look at this long tenure in the restaurant landscape. (Created by Yahoo Finance)

Starbucks names Brian Niccol Chairman and CEO, here's a look at this long tenure in the restaurant landscape. (Created by Yahoo Finance)

While the company is slowing down store growth, Niccol aims to improve the barista experience and create a career roadmap, similar to what he did at Chipotle (CMG).

"It's important we promote from within...it's important to get to this 90% promote within," he said, noting that employee retention leads to successful restaurant operations and better customer experience.

"What happens is everybody in our company, whether you start as a barista, become a store manager... become a district manager, you can grow with the company," he said.

Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at [email protected].

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