Over the last few quarters, Starbucks has struggled with continuous sales declines and slower store traffic. This seems to be a reflection of dissatisfied customers who have opted to get their morning “cup of Joe” at rival coffee shops instead.
Since taking over as Starbucks’ new CEO, Brian Niccol has emphasized the need to bring the company back to its roots by focusing on its core products and personalizing the coffee shop experience like it once did.
“I made a commitment that we’d get back to Starbucks, focusing on what has always set Starbucks apart – a welcoming coffeehouse where people gather and we serve the finest coffee handcrafted by our skilled baristas,” said Niccol in an earnings call.
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To return the business to growth, Starbucks developed a turnaround strategy that aims to improve customers’ overall experience by redesigning stores, optimizing efficiency, prioritizing coffee quality, simplifying its menu, and empowering its baristas.
Starbucks barista placing drinks in online pick-up counter.
Starbucks makes several changes to increase foot traffic and boost sales
Over the last six months, Starbucks (SBUX) has made multiple changes to its coffee shops as part of its turnaround plan to make them feel more like homes rather than establishments, creating a third place for customers.
These changes include reintroducing condiment bars after being banished during the pandemic, returning ceramic mugs for in-house sipping, and bringing back handwritten notes on to-go cups and bags to foster better customer connections.
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Staying longer at Starbucks shops now comes with a few perks as well. The company has returned the free in-café refills on hot and iced brewed coffee and tea at participating locations for non-Starbucks Rewards members.
Starbucks has also refreshed its menu with a simpler version, discontinuing 13 items to focus on coffee and quality rather than the number of customizations, which tend to complicate orders.
As for the stores themselves, Starbucks will be closing underperforming shops to invest in building new locations, and revamping old ones to make them more welcoming, cozy, and warm, encouraging customers to stay longer.
Starbucks CEO gives a six-month turnaround plan update
On Mar. 12, Starbucks CEO Brian Niccol provided a six-month update on the progress of the company’s turnaround plan to revive Starbucks’ coffeehouse and boost growth.
Although the turnaround plan is in its early stages, and true results will not be seen until all changes have been completed, more of its medium-term goals of bettering Starbucks’ in-store experience have already been enacted and are showing signs of progress.
To improve mobile, in-store, and drive-thru ordering systems, Starbucks is currently testing new risers and dedicated pickup shelves in select locations to create more separation between the café and mobile ordering.
Starbucks is also developing technological innovations to improve efficiency and has increased operating hours at 3,000 cafés based on demand to meet customers’ coffee needs.
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Not only is this turnaround plan focused on improving customers’ experience, but also making its working experience better for employees.
“To deliver a great customer experience, we also have to deliver a great partner experience,” said Niccol.
Over the last few months, Starbucks Workers United has filed several unfair labor practice charges against the company and staged multiple strikes, demanding higher wages and staffing.
Despite the fact that this is an ongoing issue that has yet to be solved, Niccol claims Starbucks has made recent changes to improve employees’ work experience, including adding more benefits such as double parental leave and increased manager promotions to reward hard work.
Although Niccol says its turnaround plan has shown improvements in the business, Starbucks’ stock has declined 1.6% in the past six months as of Mar. 14.
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