Starbucks' Realignment: Brian Niccol Plans the Overhaul

Starbucks is entering a challenging phase of realignment after its current quarterly figures have significantly missed Wall Street's expectations. CEO Brian Niccol is presenting an optimized strategy to steer the company back on the path to success. In the fourth quarter, the coffee giant recorded a sales decline of 3 percent to $9.1 billion, while adjusted earnings per share fell by 25 percent to $0.80. The recently published preliminary results had already indicated that the figures would fall short of expectations. Niccol, who took the helm at Starbucks in September, is focusing on the "Back to Starbucks" concept. This strategy concentrates on the company's core competencies: fundamental improvements, attractive pricing, and faster service. The goal is to serve customers their custom-prepared drinks within four minutes. To win back customers, Starbucks is implementing several changes. From November 7, the additional costs for plant-based milk in North America will be eliminated. Additionally, menu navigation will be simplified to enhance the barista experience and optimize supply chains and marketing. Chief Financial Officer Rachel Ruggeri also announced that the number of new store openings and renovations will be reduced in the fiscal year 2025 to reestablish Starbucks as a traditional community coffeehouse. This includes the return of ceramic mugs and the personal touch of barista craftsmanship for which Starbucks was once known. Niccol also plans to revamp the café design to offer more comfort and invite customers to linger. This includes the separate management of mobile orders and the café experience, as well as the return of the typical spice stations at the beginning of 2025. The turnaround will take time. In the fourth quarter, global store sales declined by 7%, while the Chinese market saw a 14% drop in sales. The company attributed this performance primarily to increased competition and a weaker macroeconomic environment that affected customer consumption behavior.