Starbucks (SBUX) appears to be losing its flavor amongst consumers as it just reported a startling dip in its sales. The news prompted its new CEO to announce a series of drastic changes to the company’s stores.
In Starbucks’ fourth-quarter earnings report for 2024, the coffee chain’s global comparable store sales shrunk by 7% compared to the same time period last year. Specifically in the U.S., Starbucks faced a 6% year-over-year decline in comparable store sales.
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The shrinkage in sales led Starbucks to earn about $9 billion in total net revenues during the quarter, which is a 3% decrease from what it earned during the same quarter in 2023.
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“It is clear we need to fundamentally change our strategy to win back customers. ‘Back to Starbucks’ is that fundamental change,” said Starbucks CEO Brian Niccol in the report. “My experience tells me that when we get back to our core identity and consistently deliver a great experience, our customers will come back. We have a clear plan and are moving quickly to return Starbucks to growth.”
Starbucks CEO announces significant in-store changes
During an earnings call, which he discussed the report, Niccol went into more detail about what those upcoming changes will look like in Starbucks stores after he labeled the company’s recent financial performance as “disappointing.”
Niccol claimed that Starbucks’ U.S. business is a “priority,” and that customers in this region will soon experience lower wait times to receive their orders. He said the company is aiming to deliver orders to customers in “four minutes or less.”
“We want to hand deliver a high-quality handcrafted beverage to our cafe customers in four minutes or less and deliver orders on time for our Mobile Order and Pay customers every time,” said Niccol. “We have work to do to achieve this consistently, but we've learned lessons from our success improving the drive-through experience and reducing out the window times.”
In order to achieve this ambitious goal, Niccol said that Starbucks will ensure that its stores have the right amount of staffing to fulfill orders during “morning peak and shoulder hours.”
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He also said the company will be bringing back condiment coffee bars in all of its stores by early 2025 and will complete its rollout of Clover Vertica brewers in all locations by the end of next year.
“It's a great customer experience and will help with speed of service,” said Niccol.
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The CEO also stated that Starbucks will be cutting down its “overly complex menu” to improve “throughput, quality and consistency” and emphasize its “core identity as a coffee company.”
“We will still offer customers great choices but we'll be focused on fewer, better offerings, consistently crafted,” said Niccol.
Other changes Niccol announced during the call include removing the upcharge for nondairy milk customizations at U.S. cafes, updating store designs, and prioritizing serving coffee in ceramic mugs for customers who want to enjoy their beverages inside the company’s stores.
Starbucks recently announced cutting back on discounts
The announcement from Starbucks also comes after a recent report from the Wall Street Journal revealed that Starbucks is reportedly planning to scale back the number of discounts and promotions it offers to customers. The coffee giant will instead rely on advertising to promote its seasonal drinks.
So it is no surprise that Starbucks is focusing on improving the customer experience at its stores since the decision to cut promotions may not resonate well with customers who have already complained about the company’s recent price increases.
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