Starbucks will stop charging for dairy alternatives
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Starbucks (SBUX+0.02%) is wading through a frothy foam of challenges but has some big plans to get back in customers’ good graces.
“Our financial results were very disappointing, and it is very clear we need to fundamentally change our strategy to win back customers and return to growth,” CEO Brian Niccol told investors during its earnings call on Oct. 30. “We have to make it easier for our customers to get a cup of coffee.”
One major change has to do with milk — or its lack thereof. Beginning with the upcoming holiday launch on Nov. 7, Starbucks will eliminate the up charge for non-dairy milk options in North America, making it easier for customers to customize their drinks. The coffee giant intends to maintain stable menu prices through fiscal 2025.
Niccol’s ambitious goals include ensuring handcrafted beverages can be made in four minutes or less while fulfilling mobile orders on time. The company is also aiming to fill 90% of retail leadership roles from within to improve team dynamics across stores.
Additionally, starting in early 2025, Starbucks will reintroduce condiment coffee bars to enhance customer interaction and speed of service. The rollout of Clover Vertica brewers across all company-operated stores will also be provided as an on-demand option, based on key feedback from customers.
As Starbucks aims to create a welcoming space for customers to work and socialize, it plans to enhance cafe design, provide more comfortable seating options, and serve coffee in ceramic mugs for customers who prefer to drink their beverages on-site.
Niccol emphasized that the company plans to shift its marketing focus back to Starbucks’ coffee quality, introducing “customization guardrails” to streamline the ordering process, partly because it’s “tough for customers to get through it,” and creates “additional complexity” for baristas. Niccol said Starbucks also plans to equip baristas with Sharpie’s (NWL-0.33%) again, to bring back that “human touch.”
In a menu shake-up, Starbucks recently announced it would discontinue its olive oil-infused Oleato drinks starting Nov. 7. Alongside these changes, the company is also implementing a new policy for corporate employees: To work in the office three days a week starting in January, or face potential separation from the company. While the details of this policy remain vague, it’s part of a broader effort to standardize operations.
Starbucks quarterly earnings and revenue figures fell short of Wall Street’s forecasts, revealing it’s struggling in its two largest markets, the U.S. and China. During the fourth quarter, the company generated revenue of $9.07 billion, about 80 cents a share. Analysts had expected it to generate $9.36 billion in revenue, about $1.03 earnings per share.
