Starbucks New CEO Sets Priorities As It Drifts From Core

(RTTNews) - Starbucks Corp.'s new CEO Brian Niccol announced his priorities for his initial days, with a view to focusing on improving the coffee giant's U.S. business before moving to the international markets. In an open letter to employees, customers and stakeholders, he pointed out the firm's drift from its core, and presented a plan for the first 100 days to reestablish Starbucks as the community coffeehouse.

Noting that the customers miss the Starbucks magic in the U.S., Niccol outlined four areas for improvement for the company, which has been struggling with weak financial performance for the past few quarters. These include empowering barista experience, morning service, bringing back community coffeehouse experience, and the company's branding.

To support this vision for U.S., the company plans to make investments in technology to enhance the partner and customer experience, improve supply chain, and evolve its app and mobile ordering platform.

Calling himself a long-time Starbucks customer, Niccol said, "Many of our customers still experience this magic every day, but in some places — especially in the U.S. — we aren't always delivering. It can feel transactional, menus can feel overwhelming, product is inconsistent, the wait too long or the handoff too hectic. These moments are opportunities for us to do better."

Further, regarding the international markets, Niccol said the firm needs to understand the potential path in China to capture growth. Internationally, there is enormous potential for growth, especially in regions like the Middle East, where it will work to dispel misconceptions about the brand, and in Asia Pacific, Europe and Latin America, where the love for Starbucks is strong.

Niccol, who most recently was Chairman and CEO of Chipotle Mexican Grill, Inc., took charge as the chairman and chief executive officer of the coffee chain on September 9. He succeeded Laxman Narasimhan, who resigned as CEO in mid- August, following challenging headwinds including weak profits amid slumping sales.

In its latest third quarter, Starbucks earnings dropped 7.6 percent from the prior year, on a 1 percent drop in revenues. A 1 percent rise in net revenues for the North America segment was offset by a 7 percent drop in International segment.

Global comparable-store sales also declined 3 percent, hurt by a 5 percent drop in comparable transactions. U.S. comparable-store sales edged down 2 percent, and International comparable store-sales decreased 7 percent. China comparable store sales also fell 14 percent.

At the time of Niccol's appointment, Starbucks had said that since becoming the CEO of Chipotle in 2018, he has transformed that company, by doubling the revenue with nearly sevenfold profits, seeing nearly 800 percent gain in its stock price during his leadership. All these were achieved while increasing wages for retail team members, expanding benefits, and strengthening the culture.

The Coffee chain, which operates in 87 markets around the world, has its own coffee farm, five roasting facilities, as well as Reserve Roasteries in Milan, Shanghai, Tokyo, New York City, Chicago and Seattle.