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Starbucks CEO Delays Forecast, Announces Menu Changes

Starbuck’s has announced menu changes, and taken the unusual measure of ‘suspending’ its annual fiscal forecast, for 2025, as it’s new CEO takes the reins firmly in hand and tries to get the premium coffee chain’s slumping sales back on track…

Starbuck’s new CEO wants to get the chain’s customers – and Baristas – smiling again!

Starbuck’s recently-appointed new CEO – Brian Niccol – leapt into action late last month issuing an open letter to shareholders and customers, admitting the brand has gone off the rails.

“In some places — especially in the U.S. — we aren’t always delivering,” Niccol levelled with his audience. “It can feel transactional, menus can feel overwhelming, product is inconsistent, the wait too long or the hand-off too hectic. These moments are opportunities for us to do better.”

A firm commitment

“Today, I’m making a commitment:” he continued. “We’re getting back to ‘Starbucks’. 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. This is our enduring identity. We will innovate from [t]here.”

Earlier this week, Niccol came through on his promise, announcing key elements of his ‘Back To Starbuck’s’ plan.

Significant changes…

Among the biggest changes in Niccol’s plan: a major menu overhaul to streamline choices and prune under-performing items. That change will also make it easier for harried baristas to handle their mixology and food service workloads by uncomplicating their lives. In addition, it will shrink the size and costs associated with the company’s inventory.

Consumers will also benefit from the simpler, streamlined menu. And Niccol promises to ‘fix’ the chain’s prices, which have been creeping higher and higher with the increasing complexity of the menu.

In response to complaints from customers who were feeling ‘left out’ of deals and specials, Niccol has pledged to change the company’s marketing focus to include all customers, not just ‘Starbucks Rewards’ members. Like other Fast Food chains the coffee giant has been pushing its fans hard to become loyalty program members, using ‘member-only’ specials to entice folks to sign up.

Fiscal moves…

“Surprising Wall Street, the company unexpectedly released its preliminary earnings report Tuesday evening, revealing sales fell – sharply – for the third consecutive quarter,” a Reuter’s report revealed. “Global sales slumped 7 percent, fueled by a decline of 6 percent in the United States and even more in China, where comparable sales crumbled 14 percent for the quarter ending on September 29.”

Starbuck’s shares declined 4 percent in value on the news.

However, Niccol took the rare step of delaying the company’s usual ‘next year’ financial forecast a week, to allow news of his dramatic turnaround plans to sink in with investors.

My take

Brian Niccol came to Starbuck’s from Chipotle, where he had been hired to turn that chain around, following a decade of troubles which left it on the financial ropes. He worked miracles there.

Despite some continued fluctuations, Starbuck’s shares have risen as much as 28 percent since Niccol was named CEO in a surprise move this past August.

We’ll have to wait a while to see if he can clear the high bar he’s set for himself…

~ Maggie J.