​Can a Simplified Menu Revive Starbucks’ Sales? CEO Thinks So

Starbucks’ newly appointed CEO, Brian Niccol, has announced plans to streamline the coffee chain’s menu and pricing structure as part of a broader strategy to address falling sales and recapture customer interest. This follows a significant global sales decline of 7% between July and September, with the company’s performance particularly weak in China, where sales dropped by 14% due to a sluggish economy.

Mr.ちゅらさん, CC BY-SA 4.0, via Wikimedia Commons

Niccol, who previously led Chipotle, acknowledged that Starbucks must undergo fundamental changes, citing overly complex menus, pricing issues, and store operational inefficiencies. He emphasised that improvements to the customer experience, such as refining the mobile ordering system, would be key to reversing the company’s downward trend.

“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,” Niccol stated. He also highlighted the need to alleviate bottlenecks caused by mobile orders, which often disrupt the café atmosphere, by ensuring smoother operations during peak times.

The sales decline was most pronounced in China, where the broader economic slowdown has heavily impacted consumer spending. Starbucks also reported weaker performance in its largest market, the US, where sales dropped by 6% in the same period. The company feels the effects of inflation and higher living costs, which have led consumers to cut back on discretionary spending, including coffee purchases.

Starbucks Chief Financial Officer Rachel Ruggeri admitted that despite increased investments in staffing and store operations, the efforts were insufficient to halt the decline in customer traffic. Niccol’s strategy includes:

• Focusing on streamlining service.
• Simplifying menu options.
• Creating a more efficient ordering process to improve customer throughput.

Randeep Somel, a fund manager at L&G, commented that a simpler menu could lead to faster service, reducing long queues and improving the overall customer experience. “At peak times, the queues are just too large, so simplifying the menu might help customer throughput,” he remarked during an interview with the BBC.

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Niccol has also faced criticism regarding his travel arrangements, with some questioning his decision to commute nearly 1,000 miles from his home in Newport Beach, California, to Starbucks’ headquarters in Seattle by corporate jet. Critics argue that this contradicts Starbucks’ sustainability goals, although the company has not officially responded to these concerns.

The coffee giant is scheduled to release its full financial results next week, but the company has already suspended its economic forecasts for the coming year, citing uncertainties surrounding its current performance. To reassure investors, Starbucks announced a dividend increase from 57 to 61 cents per share despite the ongoing challenges.