Starbucks on the Way Back to Its Former Strengths

After early results from Starbucks were rather sobering, the company brand finds itself at a turning point. Lower revenues, earnings per share, and declining sales in North America and China have led to a downgrade in forecasts for the coming fiscal year. The recently appointed CEO, Brian Niccol, who took the helm only in September, is not being held accountable for these figures, as many changes are still attributed to the previous management. Niccol is regarded as process-oriented and strategic thinker. In his first days as CEO, he has spent time in branches to understand the fundamentals of the business and develop improvements for the more than 15,000 branches worldwide. Most notable is the increase in quarterly dividends, which is intended to signal long-term confidence in the brand, even if the payout ratio currently appears high. Under his predecessor Laxman Narasimhan, the focus was heavily on digital orders and complex menus, leading to a loss of the original 'third place' that Starbucks once offered. Niccol, on the other hand, plans to return to the brand's roots with his new 'Back to Starbucks' strategy. This includes simplifying the menu and placing a stronger emphasis on community within the store and the quality of the products offered. A key aspect of Niccol's strategy is motivating the workforce, consisting of around 350,000 employees, to achieve the turnaround. This is accompanied by measures such as investing in career opportunities for the staff, which aim to give the company a new direction. The goal is to regain the balance between efficiency and customer satisfaction. The key to the success of these changes will be measured in sustainable revenue growth.