Starbucks CEO says company will fix 'overly complex menu' to reverse sales slump
FILE-A view of a Starbucks store and logo. (Photo by Alex Tai/SOPA Images/LightRocket via Getty Images)
Starbucks CEO Brian Niccol said the company is planning to simplify its menu and fix its pricing strategy as it attempts to win back customers and reverse its sagging sales.
Niccol, who left Chipotle in August for the coffee giant, said Tuesday in a video message that customers are visiting less often and its fourth-quarter results "tell that story."
"To welcome all our customers back and return to growth, we need to fundamentally change our recent strategy," Niccol said, adding that part of this plan includes efforts to "simplify our overly complex menu, fix our pricing architecture and ensure that every customer feels Starbucks is worth it."
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Niccol also acknowledged that the company, which faced years of unionization pressures, needs to address staffing in stores as well as remove bottlenecks and "simplify things" for baristas.
It is also "fundamentally changing our marketing," he said, acknowledging that the company had been focusing on its Starbucks Rewards customers rather than all customers.
Niccol said the company will also focus on refining its mobile order and pay operation "so it doesn't overwhelm the cafe experience."
"We know how to make these improvements and when we do, we know customers will visit more often," he said.
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In the three-month period ending Sept. 29, the company reported that stores open for at least a year declined 7%.
The company said in its preliminary earnings release that its results were "driven by softness in North America’s revenues in the quarter." The U.S. in particular saw a 6% decline in comparable store sales and a 10% decline in comparable transactions.
Niccol announced last month that he plans to first fix the company's U.S. business and will begin the early steps, laying the groundwork in his first 100 days on the job, which includes making stores more comfortable for customers, improving efficacy within stores and improving workforce morale.
One key focus area he previously noted is ensuring drinks and food are made "on time" and that stores will be more inviting.
His aim is to create more comfortable seating, so people will linger longer, and create a better distinction between "to-go" and "for-here" services.