7 ways Starbucks CEO Brian Nicol plans to change the coffee chain

starbucks CEO Brian Nicol provided further details about the company’s turnaround strategy during the company’s quarterly conference call on Wednesday.

Starbucks has reported sales declines for three consecutive quarters. But the coffee chain is hoping simple adjustments to its U.S. operations will pay off and help reverse the trend as it plans a more ambitious and comprehensive strategy.

Many of the upcoming changes are aimed at helping Starbucks achieve its small goal of delivering customized drinks to customers in under four minutes. About half of current transactions are within that threshold, Nicol said.

As Starbucks focuses on its turnaround, the company plans to reduce the number of new stores and remodel them in fiscal 2025 to free up capital, Chief Financial Officer Rachel Ruggeri told investors on a conference call.

Starbucks stock was flat in trading Thursday after the company announced its third straight quarter of declining sales.

Here’s how Nicole plans to help Starbucks recover sales.

Starbucks customers have become accustomed to entering a cafe and seeing the counter crowded with mobile orders. Nicole wants to change that.

“It’s great when it’s working well, but it can also be a challenge for both our customers and partners,” he told investors on the company’s conference call.

Mobile orders account for more than 30% of Starbucks’ U.S. transactions.

Nicol said Starbucks is working to improve the timing accuracy of its app so customers know when their drink is ready. Additionally, they want to better separate mobile order pick-up from in-person ordering inside the restaurant and reduce the amount customers can customize their drinks.

“I think there is very extensive and unnecessary customization going on right now, especially in the execution of mobile ordering apps,” Nicol told CNBC. “So I think we need to put better guardrails in place and give people access to customization for the drinks they order, so that baristas can be more consistent in what they do.” You can also.”

Starbucks menu will be renewed.

Nicol said coffee chains need to focus on “less, better” products. A streamlined menu makes it easier for baristas to make all drinks consistently. Service should also be faster since there are fewer drink recipes to remember.

“There’s always a long tail on the menu, and those items, frankly, aren’t all that great that we serve,” Nichol said, adding that baristas have a hard time making unfamiliar drinks. He added that it often takes time.

Nicol said Starbucks will also consider items it would not have put on its menu if the four-minute standard had already been in place.

While the changes may disappoint some customers, Nicol said customers will appreciate faster and more consistent service in the long run.

As part of Nicol’s “Back to Starbucks” plan, he wants the company’s locations to feel like a “third place” where customers can work and socialize outside of their home or office. I’m thinking.

The coffee chain’s position as a “third place” helped it grow into a global behemoth, but it lost its reputation along the way. Mr Nicol said he wanted to reintroduce more personal touches, such as serving coffee in ceramic mugs to customers who choose to linger in the cafe. The Sharpie will also make a triumphant return, being replaced by printed labels.

Starbucks is also overhauling its store designs with a focus on bringing back more comfortable seating and amenities.

“The reality is that the majority of cafes that we have don’t have the right seating, they don’t have the right textures, they don’t have the right layers, they don’t have the right warmth. , it’s back,” Nicole said.

In recent years, the company has increased the number of pickup-only stores with little or no seating, especially in urban areas. Nicol said those cafes could also be more welcoming to customers.

“Even though some of the implementations we’ve done don’t quite lend themselves to the traditional coffeehouse experience, there are design elements that can move this idea of ​​a community coffeehouse forward. I think so,” he told CNBC. .

At the beginning of the coronavirus pandemic, Starbucks removed its condiment bar behind the counter. Since then, if a customer wanted to add milk or sugar to a drink, even a simple drip coffee, they had to ask the barista directly.

But that will soon change. Nichol said the condiment bar will be back, giving baristas more time and saving some of the headaches for customers.

Starbucks has already increased the average working hours of its baristas. More shifts and more consistent scheduling have reduced the company’s turnover rate and increased overall retention.

But Mr Nicol also wants to ensure that the cafe is properly staffed from the morning rush hour through to the “shoulder hours”, leading up to peak hours.

Since his first week on the job in early September, Nicol has said he wants to revamp the company’s marketing. On Wednesday’s conference call, he said he wants to target marketing to a broader audience than Starbucks Rewards members and highlight the quality of Starbucks coffee.

As part of the changes in marketing, we also expect customers to see fewer deals. Nicol said discount offers can be “ineffective” and put undue stress on baristas.

Nicole started her career with a background in marketing. procter and gamble. He then moved to the next location. yum brand After working in various marketing positions, he became the head of Taco Bell. That marketing expertise was helpful when I joined the company. chipotle pepper And it seems worth it at Starbucks. He has already named former Chipotle alum Tracy Lieberman as Starbucks’ new chief global brand officer.

After years of pleas from customers, Starbucks will finally eliminate the surcharge on milk substitutes starting November 7th. The company says the change will mean some customers will save more than 10% on their drink bill.

More broadly, Starbucks has no plans to change its North American prices until its next fiscal year, which ends around early October, in hopes of improving consumer perception of prices.

Executives cite opposition to price hikes as one reason occasional customers are visiting the stores less frequently.