Brian Niccol has taken over as the new CEO of Starbucks with great anticipation. But instead of new recipes, he wants to slim down the menu – and he has good role models for this.
This is original content from the Capital brand. This article will be available for ten days on stern.de. After that, you will find it exclusively on capital.de. Capital, like the star to RTL Germany.
If a single person moves the market by $26 billion, especially in one day, then he must be important. Brian Niccol is evidently important, because his departure from the fast-food chain Chipotle to the café operator Starbucks caused a moderate tremor on the stock market. Chipotle lost almost $5.7 billion in market value on this day almost a month ago, while Starbucks gained $21 billion on the same day.
Investors are putting a lot of hope in the start of Niccol, who wrote one of the biggest success stories on the US stock exchanges with Chipotle. And so they will have followed with great interest what Niccol has written in his now published 100-day program for Starbucks, his new worker, which got into crisis under the previous CEO Laxman Narasimhan. At its core, Niccol’s turnaround plan is extremely simple and can be summed up in one sentence: Niccol wants to go back to the roots. What once made Starbucks strong should be the way forward.
This strategy, or rather the guiding principle that Niccol sent to employees as an open letter, was expected. Niccol is considered a product person – he is not someone who looks too stoically at numbers or investor interests. Even at Chipotle, he kept things simple but high-quality. Small, simple menu, but good and healthy products – basically an Apple Store as a restaurant. And that’s what Niccol is now planning at Starbucks. A purchase at Starbucks currently feels like a barter deal, wrote Niccol. Money for coffee. “Menus can feel overwhelming, the product is inconsistent, the waiting time is too long or the handover is too hectic,” he criticized. And immediately followed it up with a dig at his predecessor. “We share the feeling that we have drifted too far from our roots.”
Predecessor gutted Starbucks through to-go business
Under the previous CEO Narasimhan, Starbucks experimented with various new products, introduced new, extremely sugary drinks that had little to do with the original product, namely coffee. And Narasimhan increasingly focused on the to-go business. To do this, he built drive-in stores on a large scale and digitized the branches. This worked at first glance, and also had its advantages – for example, shorter waiting times thanks to digital pre-orders and smaller store spaces that are required.
But it has weakened brand loyalty, says Niccol. But it was precisely this brand loyalty that long-time Starbucks CEO Howard Schultz declared to be his maxim, and which made Starbucks a billion-dollar company. After all, he calculated that coffee is available everywhere, but anyone who goes to Starbucks is buying a lifestyle product. For Niccol, this also includes the time a customer spends in the café. Starbucks needs to become a “community coffee house” again, says Niccol, a place to meet people. After all, there are enough caffeine pumps.
However, many customers have apparently been perceiving Starbucks more and more recently: as a place where caffeine is served. The company has seen declining sales in the last two quarters, which was also due to the comparatively high prices that Starbucks charges. After years of real wage losses, many people have to save money and therefore prefer to turn to cheaper alternatives – if it’s just about the caffeine intake and not the coffee experience.
Niccol wants to initially concentrate on the USA, the company’s problem child and by far its most important market. Three areas in particular are to be strengthened here: service in the early morning hours, training of baristas and marketing. “We have to tell our own story and not let others define who we are,” wrote Niccol.
In addition to the USA, there is also a focus on China and the Middle East. In China, Starbucks is suffering from the general weakness in consumption, although Niccol also admits his own mistakes. “We need to better understand the growth path in China and better exploit our strengths there.” In the Middle East, where Starbucks is partially boycotted because of its support for Israel, Niccol also sees “enormous growth potential.”
Source: Stern
