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NBC News
6 days ago
- Business
- NBC News
Starbucks moves to the next phase in its turnaround: Winning over employees
As Starbucks aims to bring back customers and assuage investors with its turnaround strategy, it is also winning over its store managers with promises to add more seating inside cafes and promote internally. Since CEO Brian Niccol's first week at the company, he's been pledging to bring the company 'back to Starbucks' to lift sluggish sales. That goal was in full view at the company's Leadership Experience, a three-day event in Las Vegas for more than 14,000 store leaders this week. Starbucks unveiled a new coffee called the 1971 Roast, a callback to the year that its first location opened at Pike Place in Seattle. The finalists at Starbucks' first-ever Global Barista Championships referred to 'back to Starbucks' as they prepared drinks for judges. Even the wifi password was 'backtostarbucks!'. To investors, Niccol has already presented a multi-part strategy that involves retooling the company's marketing strategy, improving staffing in cafes, fixing the chain's mobile app issues and making its locations cozier. The company also laid off roughly 1,100 corporate workers earlier this year, saying it aimed to operate more efficiently and reduce redundancies. Starbucks shares have climbed nearly 20% since April, and are trading just shy of where they were after a nearly 25% spike the day Niccol was announced as CEO. While Starbucks has taken major steps to win back customers and Wall Street, it's also trying to regain faith among its employees. Staffers have had concerns about hours and workloads for years, sparking a broad union push across the U.S. To excite the chain's store managers, Starbucks executives' pitch this week focused on giving them more control. Before launching new drinks, like a protein-packed cold foam, the company is first testing them in five stores to gain feedback from baristas. When the chain increases its staffing this summer, managers will have more input on how many baristas they need. And next year, most North American stores will add an assistant manager to their rosters. 'You are the leaders of Starbucks. Your focus on the customer is critical. Your leadership is critical. And as you return to your coffeehouses, please remember: coffee, community, opportunity, all the good that follows,' Niccol said on Tuesday. A culture shift Niccol's 'back to Starbucks' strategy centers on the idea that the company's culture has faltered. Its Leadership Experience, typically held every couple of years, was the first since 2019 — three CEOs ago. 'We are a business of connection and humanity,' Niccol said on Tuesday afternoon, addressing a crowd of more than 14,000 managers. 'Great people make great things happen.' As more customers order their lattes via the company's app, its cafes have lost their identity as a 'third place' for people to hang out and sip their drinks. To return to Starbucks' prior culture, the company is unwinding previous decisions — like removing seats from its cafes. In recent years, the chain has removed 30,000 seats from its locations. Those renovations have irritated both customers and employees; the manager of Niccol's local Starbucks in Newport Beach, California, even asked him to remove her store from its renovation list because she wanted to keep the seating, according to Niccol. 'We're going to put those seats back in,' Niccol said, bringing a big wave of applause from the audience. He earned more applause from the audience when discussing the chain's plans to promote internally as it eventually adds 10,000 more locations in the U.S. Although historically roughly 60% of Starbucks store managers have been internal promotions, the company wants to raise that to 90% for its retail leadership roles. Thousands of new cafes means 1,000 more district managers, 100 regional directors and 14 regional vice presidents for the company — and more upward career mobility for its store leaders. Staffing more broadly has been a concern for Starbucks and its employees, fueling a wave of union elections across hundreds its stores. Past management teams have cut down on the labor allotted to stores, helping profit margins at the cost of burning out baristas and slowing service. Under Niccol, Starbucks is changing the trend. The company is accelerating plans to roll out its new Green Apron labor model by the end of the summer, because tests have shown that it improves service times and boosts traffic. As part of the model, managers will have more input on how much labor their store needs. And Chief Partner Officer Sara Kelly received a standing ovation from the crowd for her announcement that most North American locations will receive a full-time, dedicated assistant store manager next year. 'For much of the time, your store is operating without you there, and you share that even when you're not in the store, you're not able to fully disconnect, and it can feel like the weight of everything is on your shoulders ... It affects everything, the partner experience, the customer experience, the performance of your store,' Kelly said, addressing the store managers in the audience. Schultz's stamp of approval Underscoring the challenges Niccol faces in recapturing the company's brand, the two speakers who scored the most applause from store managers are no longer actively involved in the company. Former chairwoman Mellody Hobson scored standing ovations during both her entry and exit onto the arena's stage. Hobson, wiping tears from her eyes, thanked the Starbucks employees whom she said always made her feel welcome in their stores. She stepped down from her position earlier this year, ending a roughly two-decade tenure that culminated with her becoming the first African American woman to become the independent chair of a Fortune 500 company. Hobson also serves as co-CEO of Ariel Investments. Hobson ceded her position as chair of the board to Niccol when he joined the company in September. Niccol credited her with poaching him from Chipotle as Starbucks sought to find a leader who could turn around its flailing business. 'A quick conversation [with Hobson] turned into something really special for me,' Niccol said. And Hobson's longtime friend Howard Schultz also earned standing ovations from store managers. Schultz, the three-time CEO who grew Starbucks from a small chain into a coffee powerhouse, made a surprise appearance at the Leadership Experience on Wednesday morning. It marked the first time that he's appeared with Niccol publicly since the board tossed out his handpicked successor, Laxman Narasimhan, and selected the then-Chipotle CEO to take the reins. Starbucks has long been plagued by questions about its succession, given Schultz's former willingness to return to the helm of the company. But since Niccol's appointment, industry analysts have thought that he might finally be the CEO who manages to escape Schultz's lingering influence over the coffee giant. The ghost of Schultz lingered earlier in the event. Niccol shared a story about being inspired hearing Schultz speak at Yum Brands, Niccol's then-employer, back in 2008. The 71-year-old chairman emeritus also appeared in video form on Tuesday afternoon to thank Hobson for her service to the company. During his conversation with Niccol on Wednesday, Schultz co-signed his plan to get 'back to Starbucks,' saying that he did a cartwheel in his living room the first time that he heard about it. He also asked managers to bring that energy back to their own Starbucks locations. 'Be true to the coffee, be true to your partners,' Schultz told the audience. 'And I know we're going to come out of here … like a tidal wave and surprise and delight the world and prove all those cynics wrong again, just as we did in 1987.'
Miami Herald
7 days ago
- Business
- Miami Herald
Starbucks brings back fan-favorite menu item after 2-year hiatus
As teenagers, getting your license and driving to school for the first time is an unforgettable feeling most people still reminisce over. That first taste of freedom was unmatched, and some of us might have taken a little too much advantage of it. Don't miss the move: Subscribe to TheStreet's free daily newsletter One thing that might stand out in some people's minds is being late to school because making a morning Starbucks run to get the daily Frappuccino was more important than arriving to class on time. Although the coffee giant might be struggling with continuous sales declines and slower store traffic, its menu has undeniably offered some iconic beverages and food items. Related: Starbucks makes major change in rewards program loyal fans will hate Due to the evolving consumer market, however, many chains have had to discontinue multiple menu items throughout the years to allow new ones to replace them. Being denied the option of ever ordering beloved items from one's teen years is like grieving a core life memory. But now Starbucks has some good news in the nostalgia department. Image source: Shutterstock Starbucks is tapping into the happy memories of longtime customers by returning its fan-favorite Raspberry Syrup for a limited time in July, nearly two years after it was discontinued. The Raspberry Syrup was introduced to the permanent menu in 2014 to create seasonal and Secret Menu beverages like the Cotton Candy Frappuccino. It was also a popular addition to many drinks, including refreshers and teas. More food news: New Starbucks beverage goes after wellness marketChick-fil-A quietly launches unexpected new menu itemsPopular Mexican restaurant adds new menu, new store concept However, the beloved syrup was first discontinued in 2007 and again in 2023, to make room for new flavors and menu additions. The return of this syrup could mean that a new beverage or even an entire lineup featuring the Raspberry Syrup might be in the works. Since taking over as Starbucks (SBUX) CEO, Brian Niccol has emphasized the need to return the company to its roots by focusing on core products and personalizing the coffee shop experience. This has led Starbucks to simplify its core menu over the last few weeks, removing nine Frappuccinos along with other beverages and food items. Although a drastic move, the large number of available customizations had become too complex, damaging efficiency, failing to prioritize coffee quality, and elevating prices. Related: Starbucks faces huge new rival In June, at Starbucks' Leadership Experience event in Las Vegas, it introduced the Starting 5, a new program in which five stores will be chosen to test potential new menu items before rolling them out across all locations nationwide. This program is part of the "Back to Starbucks" strategy, which aims to revamp the chain's menu by "reimagining and modernizing its beverages and food to build a relevant, hype-worthy global menu that will resonate with customers," as stated in a press release. This might be why the coffee shop is returning a beloved menu item after various discontinuations and a two-year hiatus. Related: Veteran fund manager unveils eye-popping S&P 500 forecast The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.
CNBC
15-06-2025
- Business
- CNBC
Starbucks moves to the next phase in its turnaround: Winning over employees
As Starbucks aims to bring back customers and assuage investors with its turnaround strategy, it is also winning over its store managers with promises to add more seating inside cafes and promote internally. Since CEO Brian Niccol's first week at the company, he's been pledging to bring the company "back to Starbucks" to lift sluggish sales. That goal was in full view at the company's Leadership Experience, a three-day event in Las Vegas for more than 14,000 store leaders this week. Starbucks unveiled a new coffee called the 1971 Roast, a callback to the year that its first location opened at Pike Place in Seattle. The finalists at Starbucks' first-ever Global Barista Championships referred to "back to Starbucks" as they prepared drinks for judges. Even the wifi password was "backtostarbucks!". To investors, Niccol has already presented a multi-part strategy that involves retooling the company's marketing strategy, improving staffing in cafes, fixing the chain's mobile app issues and making its locations cozier. The company also laid off roughly 1,100 corporate workers earlier this year, saying it aimed to operate more efficiently and reduce redundancies. Starbucks shares have climbed nearly 20% since April, and are trading just shy of where they were after a nearly 25% spike the day Niccol was announced as CEO. While Starbucks has taken major steps to win back customers and Wall Street, it's also trying to regain faith among its employees. Staffers have had concerns about hours and workloads for years, sparking a broad union push across the U.S. To excite the chain's store managers, Starbucks executives' pitch this week focused on giving them more control. Before launching new drinks, like a protein-packed cold foam, the company is first testing them in five stores to gain feedback from baristas. When the chain increases its staffing this summer, managers will have more input on how many baristas they need. And next year, most North American stores will add an assistant manager to their rosters. "You are the leaders of Starbucks. Your focus on the customer is critical. Your leadership is critical. And as you return to your coffeehouses, please remember: coffee, community, opportunity, all the good that follows," Niccol said on Tuesday. Niccol's "back to Starbucks" strategy centers on the idea that the company's culture has faltered. Its Leadership Experience, typically held every couple of years, was the first since 2019 — three CEOs ago. "We are a business of connection and humanity," Niccol said on Tuesday afternoon, addressing a crowd of more than 14,000 managers. "Great people make great things happen." As more customers order their lattes via the company's app, its cafes have lost their identity as a "third place" for people to hang out and sip their drinks. To return to Starbucks' prior culture, the company is unwinding previous decisions – like removing seats from its cafes. In recent years, the chain has removed 30,000 seats from its locations. Those renovations have irritated both customers and employees; the manager of Niccol's local Starbucks in Newport Beach, California, even asked him to remove her store from its renovation list because she wanted to keep the seating, according to Niccol. "We're going to put those seats back in," Niccol said, bringing a big wave of applause from the audience. He earned more applause from the audience when discussing the chain's plans to promote internally as it eventually adds 10,000 more locations in the U.S. Although historically roughly 60% of Starbucks store managers have been internal promotions, the company wants to raise that to 90% for its retail leadership roles. Thousands of new cafes means 1,000 more district managers, 100 regional directors and 14 regional vice presidents for the company – and more upward career mobility for its store leaders. Staffing more broadly has been a concern for Starbucks and its employees, fueling a wave of union elections across hundreds its stores. Past management teams have cut down on the labor allotted to stores, helping profit margins at the cost of burning out baristas and slowing service. Under Niccol, Starbucks is changing the trend. The company is accelerating plans to roll out its new Green Apron labor model by the end of the summer, because tests have shown that it improves service times and boosts traffic. As part of the model, managers will have more input on how much labor their store needs. And Chief Partner Officer Sara Kelly received a standing ovation from the crowd for her announcement that most North American locations will receive a full-time, dedicated assistant store manager next year. "For much of the time, your store is operating without you there, and you share that even when you're not in the store, you're not able to fully disconnect, and it can feel like the weight of everything is on your shoulders ... It affects everything, the partner experience, the customer experience, the performance of your store," Kelly said, addressing the store managers in the audience. Underscoring the challenges Niccol faces in recapturing the company's brand, the two speakers who scored the most applause from store managers are no longer actively involved in the company. Former chairwoman Mellody Hobson scored standing ovations during both her entry and exit onto the arena's stage. Hobson, wiping tears from her eyes, thanked the Starbucks employees whom she said always made her feel welcome in their stores. She stepped down from her position earlier this year, ending a roughly two-decade tenure that culminated with her becoming the first African American woman to become the independent chair of a Fortune 500 company. Hobson also serves as co-CEO of Ariel Investments. Hobson ceded her position as chair of the board to Niccol when he joined the company in September. Niccol credited her with poaching him from Chipotle as Starbucks sought to find a leader who could turn around its flailing business. "A quick conversation [with Hobson] turned into something really special for me," Niccol said. And Hobson's longtime friend Howard Schultz also earned standing ovations from store managers. Schultz, the three-time CEO who grew Starbucks from a small chain into a coffee powerhouse, made a surprise appearance at the Leadership Experience on Wednesday morning. It marked the first time that he's appeared with Niccol publicly since the board tossed out his handpicked successor, Laxman Narasimhan, and selected the then-Chipotle CEO to take the reins. Starbucks has long been plagued by questions about its succession, given Schultz's former willingness to return to the helm of the company. But since Niccol's appointment, industry analysts have thought that he might finally be the CEO who manages to escape Schultz's lingering influence over the coffee giant. The ghost of Schultz lingered earlier in the event. Niccol shared a story about being inspired hearing Schultz speak at Yum Brands, Niccol's then-employer, back in 2008. The 71-year-old chairman emeritus also appeared in video form on Tuesday afternoon to thank Hobson for her service to the company. During his conversation with Niccol on Wednesday, Schultz co-signed his plan to get "back to Starbucks," saying that he did a cartwheel in his living room the first time that he heard about it. He also asked managers to bring that energy back to their own Starbucks locations. "Be true to the coffee, be true to your partners," Schultz told the audience. "And I know we're going to come out of here … like a tidal wave and surprise and delight the world and prove all those cynics wrong again, just as we did in 1987."
Yahoo
14-06-2025
- Business
- Yahoo
Starbucks service plan prompts surprising analyst stock-price-target revisions
Starbucks service plan prompts surprising analyst stock-price-target revisions originally appeared on TheStreet. Have a seat and let Brian Niccol tell you all about his big ideas for Starbucks () . Actually, seats are a part of the "Back to Starbucks" plan as the chief executive of the world's largest coffee chain looks to turn around a decline in foot traffic and sales. 💵💰Don't miss the move: Subscribe to TheStreet's free daily newsletter 💰 Niccol, who joined from Chipotle in September, said that pulling back on in-store seating was one of the company's biggest missteps, and he wants to fix that. "We had this strategy that I think was just a misfire of a purpose-driven store. It's like, well, the purpose is community connection," Niccol told Axios. "I think that's what got us off our game. We've got to get the seats back." Niccol made his comments during the company's Leadership Experience in Las Vegas, where Starbucks hosted more than 14,000 store managers. "It's time for us to lead again," Niccol told the crowd. "We're going to lead in warm, welcoming coffee houses. We're going to lead in innovation. Innovation to our menu." In the past several months Starbucks reintroduced condiment bars and ceramic mugs for in-house sipping, brought back handwritten notes on to-go cups and bags to foster better customer-barista connections, and returned free in-café refills to make its coffee shops feel more like homes. The Seattle coffee giant also refreshed and simplified its menu, discontinuing 13 items and eliminating extra charges for milk alternatives. In addition, the company plans to add full-time assistant managers across the U.S. to help busy stores run more smoothly. Former Starbucks CEO Howard Schultz reportedly was so thrilled with the strategy that he "did a cartwheel in my living room" the first time he heard about it. "It was so brilliant. It's short, to the point and it's exactly to the tip of the spear who we should be and who we are," Schultz said. "And we are, above all else, a coffee company."Niccol told Reuters that he would accelerate the rollout of the coffeehouse chain's new staffing and service model, aiming for all North American stores by summer's end. The initial plan called for just a third of U.S. stores by fiscal year-end. The Green Apron model includes in-store technology to more efficiently sequence orders, as well as dedicated baristas for drive-through orders. Starbucks initially rolled out the service changes to 700 stores. From a single store in Seattle in 1971, the company now has more than 40,000 outlets worldwide. During the company's April 29 quarterly earnings call, Niccol said it would be introduced in a third of U.S. stores by fiscal year-end. Starbucks used the Las Vegas event to unveil a generative AI assistant created with Microsoft () Azure's OpenAI, according to CNBC. It plans to roll out the system to 35 locations in June. A broad launch of what it calls the Green Dot Assist platform across the U.S. and Canada is slated for the company's fiscal 2026, which starts in the fall. Starbucks stock is up 3.1% in 2025 and up nearly 18% from a year ago. Citi analyst Jon Tower raised the investment firm's price target on Starbucks to $95 from $84 and affirmed a neutral rating on the shares, according to The Fly. The analyst also added an "upside 90-day short-term view" on Starbucks. The company's pull-forward of labor investment back into stores will likely lead traffic to recover more quickly, the analyst estimates. Tower said that while the cost of this investment remains unclear, the improvement in one-year traffic trends, particularly given soft comparisons, will likely drive the shares higher in the near he also said Starbucks's turnaround narrative remains "this will take time," as sales are emphasized before profit margins, and its long-term profitability remains unclear. RBC Capital boosted its price target on Starbucks to $100 from $95 while reiterating an outperform rating. The firm said it was encouraged following the presentations at the company's Leadership Experience. The accelerated labor deployment in particular suggests that management has increased confidence in their new strategy, translating to potential upside in revenue, RBC said. Ahead of the event, investors' expectations around fiscal 2026 earnings per share were depressed, since they considered that it would be another investment year, followed by more material traffic improvement in fiscal 2027, RBC service plan prompts surprising analyst stock-price-target revisions first appeared on TheStreet on Jun 14, 2025 This story was originally reported by TheStreet on Jun 14, 2025, where it first appeared. Sign in to access your portfolio
Miami Herald
14-06-2025
- Business
- Miami Herald
Starbucks service plan prompts surprising analyst stock-price-target revisions
Have a seat and let Brian Niccol tell you all about his big ideas for Starbucks (SBUX) . Actually, seats are a part of the "Back to Starbucks" plan as the chief executive of the world's largest coffee chain looks to turn around a decline in foot traffic and sales. Don't miss the move: Subscribe to TheStreet's free daily newsletter Niccol, who joined from Chipotle in September, said that pulling back on in-store seating was one of the company's biggest missteps, and he wants to fix that. "We had this strategy that I think was just a misfire of a purpose-driven store. It's like, well, the purpose is community connection," Niccol told Axios. "I think that's what got us off our game. We've got to get the seats back."Niccol made his comments during the company's Leadership Experience in Las Vegas, where Starbucks hosted more than 14,000 store managers. "It's time for us to lead again," Niccol told the crowd. "We're going to lead in warm, welcoming coffee houses. We're going to lead in innovation. Innovation to our menu." In the past several months Starbucks reintroduced condiment bars and ceramic mugs for in-house sipping, brought back handwritten notes on to-go cups and bags to foster better customer-barista connections, and returned free in-café refills to make its coffee shops feel more like homes. The Seattle coffee giant also refreshed and simplified its menu, discontinuing 13 items and eliminating extra charges for milk alternatives. In addition, the company plans to add full-time assistant managers across the U.S. to help busy stores run more smoothly. Former Starbucks CEO Howard Schultz reportedly was so thrilled with the strategy that he "did a cartwheel in my living room" the first time he heard about it. "It was so brilliant. It's short, to the point and it's exactly to the tip of the spear who we should be and who we are," Schultz said. "And we are, above all else, a coffee company." Related: Starbucks makes huge investment to solve a key problem Niccol told Reuters that he would accelerate the rollout of the coffeehouse chain's new staffing and service model, aiming for all North American stores by summer's end. The initial plan called for just a third of U.S. stores by fiscal year-end. The Green Apron model includes in-store technology to more efficiently sequence orders, as well as dedicated baristas for drive-through orders. Starbucks initially rolled out the service changes to 700 stores. From a single store in Seattle in 1971, the company now has more than 40,000 outlets worldwide. During the company's April 29 quarterly earnings call, Niccol said it would be introduced in a third of U.S. stores by fiscal year-end. Starbucks used the Las Vegas event to unveil a generative AI assistant created with Microsoft (MSFT) Azure's OpenAI, according to CNBC. It plans to roll out the system to 35 locations in June. A broad launch of what it calls the Green Dot Assist platform across the U.S. and Canada is slated for the company's fiscal 2026, which starts in the fall. Starbucks stock is up 3.1% in 2025 and up nearly 18% from a year ago. Citi analyst Jon Tower raised the investment firm's price target on Starbucks to $95 from $84 and affirmed a neutral rating on the shares, according to The Fly. The analyst also added an "upside 90-day short-term view" on Starbucks. The company's pull-forward of labor investment back into stores will likely lead traffic to recover more quickly, the analyst estimates. Tower said that while the cost of this investment remains unclear, the improvement in one-year traffic trends, particularly given soft comparisons, will likely drive the shares higher in the near term. Related: Starbucks reveals big change for baristas, customers But he also said Starbucks's turnaround narrative remains "this will take time," as sales are emphasized before profit margins, and its long-term profitability remains unclear. RBC Capital boosted its price target on Starbucks to $100 from $95 while reiterating an outperform rating. The firm said it was encouraged following the presentations at the company's Leadership Experience. The accelerated labor deployment in particular suggests that management has increased confidence in their new strategy, translating to potential upside in revenue, RBC said. Ahead of the event, investors' expectations around fiscal 2026 earnings per share were depressed, since they considered that it would be another investment year, followed by more material traffic improvement in fiscal 2027, RBC added. Related: Fund-management veteran skips emotion in investment strategy The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.
