Starbucks CEO Brian Niccol Prioritizes Cafe Renovations and Customer Experience as Sales Rebound
Quick Look
Two years into Starbucks' turnaround, CEO Brian Niccol is focusing on cafe makeovers and customer experience improvements as sales rebound, with over 1,000 renovations completed in nine months and same-store sales rising 7.9% in the fiscal third quarter.
AI-generated summary
Why It Matters
Starbucks has been undergoing a turnaround under CEO Brian Niccol, who took leadership in 2024, focusing on returning to the brand's roots to win back customers amid competition from lower-priced rivals.
Two years into Starbucks ' turnaround, CEO Brian Niccol is prioritizing makeovers for the coffee chain's cafes and improving the customer experience as sales rebound.
"Starbucks is back," Niccol said on CNBC's "Squawk Box" on Thursday.
Under Niccol's leadership, Starbucks has tried to win back coffee drinkers by returning to its roots. The plan, called "Back to Starbucks," has emphasized improving the experience for both customers and baristas and reminding lapsed loyalists why they used to love the coffee chain.
The changes come as rivals have tried to appeal to coffee drinkers with lower prices and convenience.
The current stage of the turnaround focuses on improving its coffeehouses. Niccol said more than 1,000 renovations have been completed over the past nine months, with thousands more planned for the next fiscal year.
Most of the makeovers focus on superficial touches, like adding more seating and softer lighting, with the goal of making the cafes more welcoming to customers. The changes bring back "the Starbucks vibe," according to Niccol.
Another key step is continuing to improve the customer experience. More than a year ago, the company began training baristas on its new "Green Apron Service" program, designed to create more positive interactions with customers. But Starbucks is aiming high, with an ambition to "be the world's greatest customer service company," Niccol wrote in a memo to employees on Thursday.
The Back to Starbucks strategy has begun to pay off. In the company's fiscal third quarter, its same-store sales rose 7.9%, lifted by strong performance in the U.S., its biggest market.
"As a result of this work, our business has made the turn," Niccol wrote in the company memo. "We have returned to growth, delivered positive global comps and improved margins. We have positioned Starbucks to perform for the long term."
Since Niccol was announced as Starbucks' next CEO in 2024, shares of the company have risen about 30%. The S&P 500 has climbed 42% over the same period.
What to Watch
AI outlook — possibilities, not facts
Starbucks will continue same-store sales growth in the next fiscal year.
Likely · Within months
Open Questions
- How many additional cafe renovations are planned for the next fiscal year?
- What specific metrics define 'the world's greatest customer service company' goal?
- How will Starbucks sustain same-store sales growth beyond the current rebound?
