Starbucks CEO Brian Niccol is determined to reverse a startling trend that has negatively impacted the coffee chain’s stores over the past few months.
All year, Starbucks (SBUX) has been struggling with low sales for a number of reasons which include customers taking issue with the chain’s high menu prices and a boycott over alleged political alliances in the Gaza war.
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In Starbucks’ fourth-quarter earnings report for 2024, the coffee chain’s comparable store sales in the U.S. declined by 6% year-over-year. This contributed to the company facing a 3% year-over-year decline in its total revenues during the quarter.
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Niccol called Starbucks’ recent performance “disappointing” during an earnings call on Oct. 30.
Starbucks CEO announces a major change
As this consumer downturn continues to roar, Niccol, who became CEO of Starbucks in September, just announced the company will be “hitting the pause button” on a practice that has drawn a slew of customer complaints on social media.
In a recent interview with ABC News, Niccol stated that the company will be ceasing price increases in the near future as it aims to become more “transparent.”
“We're going to hit the pause button on any pricing for this fiscal year,” said Niccol. “I still think there's an opportunity for us to simplify the pricing architecture. I don't love the fact that in our app right now while you're doing this customization it doesn't inform you what has happened to the price. So I want to get more transparent with the pricing.”
The announcement comes when Chipotle, which Niccol was former CEO of, recently confirmed that it is raising its menu prices by 2% to offset higher costs from inflation.
Starbucks faced constant customer complaints about hiked prices
Many fast-food restaurants have rapidly raised their prices in recent years. According to a recent report from FinanceBuzz, between 2014 and 2024, restaurants increased their prices by 60% on average, which means they’ve increased prices at a rate almost double the national inflation rate.
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The report notes that Starbucks only raised its prices by 39% during that period, which is “only slightly higher than the actual inflation rate during that time (31%).”
Amid the gradual price increases, consumers have taken to social media in recent months to complain about feeling the extra pinch in their wallets every time they visit Starbucks.
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Starbucks CEO doubles down on upcoming changes to stores
Starbucks’ announcement of halting price increases comes after a report from the Wall Street Journal in October revealed that the coffee chain is reportedly planning to scale back the number of discounts and promotions it offers customers.
During his interview with ABC News, Niccol also revealed that Starbucks will be laser-focused on its new initiative to get orders into customers’ hands within 4 minutes or less, especially for digital orders.
Related: Starbucks CEO reveals major changes to stores after sales decline
“We're right now investing in how we build the technology so that when a mobile order comes in, we basically give you a time that your drink will be ready,” said Niccol. “So today, we just kind of give you an estimate ‘hey it'll be ready in 3 to 5 minutes.’ In the future, what'll happen is we'll be like ‘Rebecca, your drink will be ready at 9:00’ instead of it just being made sitting on the counter waiting for people to come.”
He also said that the company’s new plan to cut items from its menu in order to simplify it will help with boosting the speeds in which orders are prepared and handed to customers.
“We're going to do fewer things, but we're going to do fewer things better,” said Niccol.
Some other changes Starbucks customers should expect to see in U.S. stores in the near future include the return of condiment coffee bars by early 2025, no upcharge for nondairy milk customizations, updated store designs and coffee served in ceramic mugs for those who choose to enjoy their beverages in stores.
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