BUSINESS STRATEGY

Struggling Starbucks chain says it plans to get back to basics

By our African Marketing Confederation News Team | 2024

New CEO wants to simplify the menu, review pricing, be more welcoming, and refocus on what made the business great in previous years.

Global coffee chain Starbucks is aiming to boost its stagnating business by, among other things, simplifying what it believes has become an overly complex menu and reviewing its pricing strategy.

Photo: Şahin Sezer Dinçer from Pexels

The impending changes, which are part of a wider overhaul of the business, have been announced by new CEO, Brian Niccol.

Starbucks has been struggling for some time and Niccol recently took over from former chief executive, Laxman Narasimhan, who lasted only 18 months in the role before being ousted.

The new CEO believes the chain, which was founded in the US in 1971 and now has more than 38,000 stores worldwide, must ‘fundamentally change’ its strategy to win back customers.

Profits will be down 25% versus last year

Starbucks’ global sales reduced by 7% in the three months to the end of September, while profits will be 25% lower than in the same period a year earlier. Sales at US branches were 6% lower in the past three months, and went down by 14% in China.

“Figures revealed that Starbucks’ customers have cut back on spending as the rising cost of living squeezed budgets, particularly in China,” the BBC reports. “But Mr Niccol also admitted that there were issues in its stores such as not enough staff and customer bottlenecks.”

The new CEO has made a pledge to “get back to Starbucks”, adding: “We will simplify our overly complex menu, fix our pricing architecture, and ensure that every customer feels Starbucks is worth it every single time they visit.”

In a message sent to company staff, Niccol said: “We’re refocusing on what has always set Starbucks apart – a welcoming coffeehouse where people gather, and where we serve the finest coffee, handcrafted by our skilled baristas. This is our enduring identity. We will innovate from here.”

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