During his initial quarterly earnings call as Starbucks CEO, Brian Niccol provided a much-needed sense of clarity and decisiveness to investors and employees. The coffee chain has experienced turbulence, having cycled through four CEOs since 2022 and oscillated between various strategies, resulting in disordered operations, declining same-store sales for three consecutive quarters, and a brand in disarray. Niccol, previously known for revitalizing Chipotle Mexican Grill, was recruited in August to tackle Starbucks’ downturn, causing the company’s shares to leap by 24% upon the announcement of his new position.
Niccol has previewed elements of his approach in recent days, and during the earnings call, he detailed his “Back to Starbucks” plan. He presented himself as a decisive leader with a clear strategy for moving forward. “It is clear we need to fundamentally change our strategy to win back customers and return to growth,” Niccol stated to the analysts.
The CEO unveiled several initiatives aimed at realigning Starbucks with its business fundamentals and addressing issues that have slowed operations and alienated patrons. These include reinstating self-service milk and sugar stations in U.S. cafes by 2025, eliminating extra charges for non-dairy milk alternatives, simplifying the menu, and implementing “common sense guardrails” on mobile orders.
Niccol’s swift and decisive actions at Chipotle in 2018, following a food safety crisis, were noted for garnering relief among Wall Street analysts, who expressed similar sentiments during the Starbucks call. Morgan Stanley commended the new CEO’s approach, describing it as a “clear and detailed vision for the future” and aspirational, akin to the Starbucks brand at its peak. Stifel analysts also praised Niccol for communicating with clarity and precision, characteristics of a skilled leader.
The focus on restoring the “welcoming coffee house” atmosphere is seen as essential for Starbucks’ employees and customers following a period of upheaval. Historically positioned as a “third place,” separate from home or work, Starbucks’ shift towards becoming mobile order hubs has led to chaotic conditions during peak times and diminished the customer experience. This shift has also seen a reduction in store sizes and contributed to Starbucks’ perception as more of a commodity.
Even Howard Schultz, who transformed Starbucks from a single Seattle coffee shop to a global giant, acknowledged earlier this year that “the shine was off the brand.” Schultz, who returned twice after retiring in 2000 to serve as CEO, was noted for undermining his chosen successor, Laxman Narasimhan, with a critical LinkedIn post. Schultz’s third tenure also saw tensions with store workers during a period of strained relations between the company and its employees.
However, Niccol’s return-to-office policy has drawn some scrutiny. Starbucks employees will be required to work in person three days a week starting next year or face potential termination. Meanwhile, Niccol has been permitted to remain based in Southern California instead of moving to Starbucks’ Seattle headquarters. A Starbucks spokesperson explained to Fortune that Niccol will be traveling extensively across the U.S. and internationally for operational purposes, yet the perceived double standard may undermine some of his efforts.
Amidst the challenges Starbucks has faced in recent years, Niccol’s clear communication of the company’s direction is seen as highly beneficial. As Niccol remarked, “We have to make it easier for our customers to get a cup of coffee,” capturing the simplicity and directness appreciated by all stakeholders.
