Hailey Whitlock, Writer

As featured in CNN, Starbucks’ sales fell for the third consecutive quarter as the preliminary sales report for the fourth quarter and fiscal year were published for the popular coffee chain. As explained by Chief Financial Officer (CFO) Rachel Marie Ruggeri in an investor call addressing the 2024 fiscal year, the quarter 4 consolidated revenue fell 3% from the prior year to 9.1 billion dollars. US stores saw a 6% decline in comparable store sales and a 10% decline in comparable transactions; however, a 4% increase in the average ticket (mainly through pricing) counterbalances part of this decline. In fact, in a move that worried investors, the company announced that guidance will be suspended for the full 2025 fiscal year.

In light of recent financial challenges for the coffee chain, Starbucks appointed Brian Niccol as the new Chief Executive Officer (CEO), who began on Sept. 9, 2024. According to a statement released by Starbucks, Niccol said in relation to his new position, “I am excited to join Starbucks and grateful for the opportunity to help steward this incredible company, alongside hundreds of thousands of devoted partners. I have long-admired Starbucks’ iconic brand, unique culture and commitment to enhancing human connections around the globe. As I embark upon this journey, I am energized by the tremendous potential to drive growth and further enhance the Starbucks experience for our customers and partners, while staying true to our mission and values.” 

While disappointed by the low quarter four metrics, Niccol is no stranger to struggling companies. According to CNN, Niccol is known for changing the trajectory of floundering businesses after working as the CEO of Chipotle following its E. coli outbreaks in 2015. As attested by Starbucks, since Niccol became the CEO of Chipotle in 2018, revenue has almost doubled, profits increased seven-fold and stock prices for the company have increased by approximately 800%. In doing so, the culture of the company was strengthened, with increased wages for workers and better benefits. As such, Niccol was welcomed as Starbucks new CEO with the goal of fixing the company’s financial challenges. 

When questioned about these lackluster results in a conference call addressing the Quarter 4 earnings, Niccol stated, “it is clear we need to fundamentally change our strategy to win back customers and return to growth. ‘Back to Starbucks’ is that fundamental change. We have to get back to what has always set Starbucks apart, a welcoming coffee house where people gather and where we serve the finest coffee, handcrafted by our skilled baristas.” 

Niccol advocates for focusing on the separation between to-go and in store purchases. He aims to improve the in-store experience by adding more comfortable furniture and ceramic mugs to encourage customers to enjoy their purchases within Starbucks. Further, the company is striving to provide drinks to patrons within a four minute time frame. As a result, the complex Starbucks menu will be simplified. 

Another adjustment emphasized by Niccol is bringing back condiment coffee bars in all Starbucks cafes by early 2025 to dually improve the speed of service and the customer experience. In an effort to make prices more competitive, as elucidated by NPR as of Nov. 7, 2024, there will no longer be an upcharge for non-dairy milk substitutes in North American cafes. The company also stated its plan to keep prices consistent throughout the 2025 fiscal year. 

However, the coffee chain did mention that to carry out these initiatives, discount-driven offers will be reduced because they often overburden baristas, are time consuming and offer only minimal benefits. 

Overall, Starbucks is shifting to a platform that simplifies the coffee chain we know today to what it once was: a cafe to quickly receive quality drinks to enjoy in a comfortable, relaxing environment.