Starbucks CEO: “We Need to Fundamentally Change Our Strategy”

Starbucks “unexpectedly released its preliminary earnings report Tuesday evening, revealing sales fell—sharply—for the third consecutive quarter. Global sales slumped 7%, fueled by a decline of 6% in the United States and even more in China, where comparable sales crumbled 14% for the quarter ending on September 29,” reported CNN.

As a result, Starbucks took the extraordinary step of suspending its financial guidance for the rest of the year. New CEO Brian Niccol was blunt in his assessment, writing that Starbucks’ financial performance “makes it clear that we need to fundamentally change our strategy so we can get back to growth,” according to CNN.

Some of the problems that Niccol wants to fix include an “overly complex menu,” staffing levels at cafes and pricing so “every customer feels Starbucks is worth it every single time they visit.” In a statement and video on the Starbucks website, Niccol said “we need to focus on what has always set us apart—a welcoming coffeehouse where people gather and where we serve the finest coffee, handcrafted by our skilled baristas.”

“People love Starbucks, but I’ve heard from some customers that we’ve drifted from our core, that we’ve made it harder to be a customer than it should be, and that we’ve stopped communicating with them,” Niccol said. “As a result, some are visiting less often, and I think today’s results tell that same story.”

“Perhaps one of the biggest changes he’s already made was its marketing. The chain recently rolled out ASMR-like commercials that highlight the sounds and visuals of its handcrafted coffee drinks. Under Niccol, Starbucks is also shifting away from targeting its rewards program members to advertising to attract all customers,” says CNN.

“Starbucks has always been a place where people come together,” Niccol said. “We are revisiting our stores to make sure we’re offering the amenities you’d expect in a community coffeehouse.”

Earlier this month, Starbucks scaled back promotional offers through its mobile app, wanting more of its customers to pay full price. The move is “part of new CEO Brian Niccol’s strategy to reposition Starbucks as a premium brand while also reducing the strain on employees, who get flooded with work when promotions are high,” reported CNN.