After 20 years going to Starbucks every single day at 4:30 a.m., longtime buyer Tony Dennis deserted the corporate final year.
“I was frustrated,” he informed CNBC.
The buyer expertise he used to like had disappeared. Baristas did not have interaction with him, regardless of his every day visits. At the identical time, the price of his double-shot tall nonfat lattes and double-shot tall nonfat cappuccinos stored climbing.
The 65-year-old Las Vegas actual property developer wasn’t the one Starbucks buyer who now not felt the identical loyalty. Following a drift of shoppers away from the chain and two disastrous earnings reviews, Starbucks’ board ousted then-CEO Laxman Narasimhan and poached Brian Niccol from Chipotle, the place he led a turnaround after the burrito chain’s foodborne sickness scandal.
Tuesday marks Niccol’s one-year anniversary on the espresso big, and evaluations of his push to revamp the chain are combined. Same-store gross sales and visitors are nonetheless shrinking as clients select to caffeinate at house or change to newer rivals, like Dutch Bros. or 7 Brew.
Some of Niccol’s modifications have rankled clients and baristas. And buyers are realizing {that a} comeback may take longer than they initially predicted. The inventory has fallen 7% since Niccol took the reins.
“Obviously, there’s a lot of excitement when he comes in, he’s going to make a lot of immediate changes. But I think the reality is that this doesn’t happen overnight,” mentioned Logan Reich, RBC Capital Markets analyst.
Brian Niccol, CEO of Starbucks, talking with CNBC on Oct. thirty first, 2024.
CNBC
From his first week on the helm of the corporate, Niccol pledged to carry the espresso big “back to Starbucks,” returning to its roots as a so-called third place to reverse the chain’s troubling gross sales declines. Wall Street preferred his plans and his resume, which included main Yum Brands’ Taco Bell and presiding over a profitable turnaround at Chipotle. Former CEO Howard Schultz, who turned Starbucks into a worldwide espresso big, gave his blessing for the hiring and has supported his turnaround technique.
While the hassle has not gone as easily as Niccol’s champions would have anticipated, there are nonetheless promising indicators. The firm posted its best-ever U.S. gross sales week for company-owned places when the pumpkin spice latte and different fall drinks returned to menus final month. Starbucks is accelerating its rollout of its “Green Apron Service” program designed to enhance hospitality, citing improved gross sales at take a look at places.
Niccol himself has mentioned the turnaround is forward of schedule.
“What we’re really excited about is we’re seeing both non-Rewards customers come back in a big way, as well as Rewards customers. That is, to me, the sign that we’re doing the right things, both in the store and outside of the store,” Niccol informed CNBC’s Kate Rogers in an interview that aired on Tuesday.
Back to Starbucks?
Signage at a Starbucks espresso store in New York, US, on Monday, July 28, 2025.
Victor J. Blue | Bloomberg | Getty Images
For Starbucks’ new period, Niccol turned again to the espresso chain’s early days.
Under Niccol’s management, the early phases of the turnaround plan got here collectively rapidly. He mentioned he spent a number of weeks speaking with clients and workers earlier than entering into the function, which formed his early concepts about methods to repair the corporate and convey it again to its former glory.
He named reviving the U.S. enterprise as his preliminary precedence. To draw clients again, its advertising would concentrate on espresso. Orders can be prepared in 4 minutes or much less. The drink pickup stations would now not be chaotic.
Its shops — now internally known as “coffeehouses” — have gotten cozier and extra welcoming to clients who needed to linger. Familiar touches, just like the condiment bar, have reappeared. Unpopular menu gadgets, just like the Royal English Breakfast Latte and the White Hot Chocolate, have disappeared.
Some clients are already coming again.
Dennis noticed the modifications at his native Starbucks taking maintain in actual time during the last six-to-nine months. A brief defection to Dunkin’ did not stick. He prefers to drink his espresso inside a restaurant, lingering for an hour or two to get began on his workday and chat with different regulars.
“What drove me back is that the alternatives are no better, and I’ve seen the changes — there’s an engagement, there’s a commitment to the customer experience again, to create a place for people to hang and have fun and be social,” Dennis mentioned.
But not all of Niccol’s modifications have been effectively acquired.
Take his mandate that baristas would begin writing messages with Sharpies on drink cups once more. The observe dates to the analog days, when baristas wanted to write down clients’ names manually to distinguish orders. But by 2016, stickers changed handwriting as cell ordering grew extra widespread, and the observe utterly disappeared in 2020 with the onset of the Covid-19 pandemic.
“It’s going to give [baristas] the opportunity to put that additional human touch on every coffee experience as well,” Niccol mentioned on the corporate’s earnings convention name in late October, saying the change.
But the Sharpie messages could make baristas’ jobs a little bit bit harder, significantly if their location is understaffed.
“If we’re in a rush, and we only have two people working, we are still expected to write on every single cup,” mentioned Sabina Aguirre, a Starbucks barista in Columbus, Ohio, who helped her retailer unionize in May. “And if my manager notices a single cup that doesn’t have writing on it, that will immediately become a ‘coaching moment.'”
As a buyer, Dennis mentioned that he appreciates the private contact, even when it’s a “goofy thing.”
“I thought it was kind of affected and not authentic … but I’ve lived with it for a few months, and it may take them another 30 seconds to deliver my coffee, but I like the tone that it sets that ‘we’re a customer-obsessed organization,'” he mentioned.
New executives and union talks
A barista pours frothed milk right into a drink inside a Starbucks Corp. espresso store in New York.
Victor J. Blue | Bloomberg | Getty Images
Niccol’s new technique additionally introduced modifications to the corporate’s workforce.
It began with the highest ranks, as Michael Conway, CEO of the corporate’s North American enterprise, left after being within the job for below a year. So did Sara Trilling, president of the North American enterprise, and Arthur Valdez, the corporate’s chief provide officer. Mellody Hobson, who had served as chair of the board earlier than handing off the title to Niccol, stepped down from her seat after practically 20 years with the corporate.
Niccol crammed the C-suite with many previous colleagues from Taco Bell, like Meredith Sandland, who serves as Starbucks’ chief retailer growth officer, and Mike Grams, who now’s the corporate’s chief working officer. Tressie Lieberman, a Chipotle and Yum alum, was an early rent as Starbucks’ world chief model officer.
Nordstrom alum Cathy Smith joined as chief monetary officer, changing Rachel Ruggeri.
But that wasn’t the one reorganization occurring on the firm.
In February, Starbucks laid off about 1,100 company staff. At the time, Niccol mentioned that the job cuts had been meant to extend effectivity and accountability and scale back complexity.
And in July, Starbucks announced that company workers should return to the workplace 4 days every week beginning in October — or take a buyout.
The announcement drew controversy as a result of Niccol, a longtime Southern California resident, wasn’t required to relocate to Starbucks’ headquarters in Seattle when the corporate employed him. In his provide letter outlining his employment phrases, the corporate pledged to ascertain a small distant workplace in Newport Beach, California. These days, he defaults to in-person work in Seattle when he is not touring, in accordance with the corporate.
But the overwhelming majority of Starbucks workers who’ve been affected by Niccol’s coverage modifications work within the chain’s roughly 9,000 company-owned places.
For years, baristas have complained about understaffing and inconsistent hours, sparking a broad union push throughout the U.S. The firm has mentioned that it elevated staffing this summer season and gave managers extra enter on what number of baristas they want. Next year, most North American places will add an assistant supervisor to their rosters.
But the most important change comes from the chain’s “Green Apron Service” program, which is backed by extra labor hours to make sure correct staffing and “smart queue” expertise to enhance service instances. It additionally consists of working requirements that emphasize connecting with clients.
“It’s already helping us deliver better throughput in the morning and through the balance of day, while creating more time for customer connection and service,” Niccol wrote in a letter to workers on Monday, celebrating the one-month anniversary of the nationwide rollout.
Aguirre criticized the brand new technique for dedicating a place to a “host” who arms off drinks and chats with clients, saying that it does little to assist with understaffing. However, different baristas have famous that the function is extra versatile and might rotate to creating drinks when wanted.
More broadly, Starbucks Workers United, which represents greater than 600 company-owned places within the U.S., has criticized administration for not returning to the bargaining desk. Weeks into the job, Niccol committed to working with the union.
Starbucks Workers United spokesperson Michelle Eisen mentioned that talks fell aside a number of months after Niccol joined the corporate and that the corporate hasn’t responded to requests from the union to restart negotiations.
Starbucks mentioned that the union represents solely about 5% of its workforce and does not signify the hundreds of staff who’re enthusiastic about Niccol’s technique.
“The facts show Back to Starbucks is making the experience better for both customers and partners,” a Starbucks spokesperson mentioned in a press release to CNBC. “Retail partner turnover is at record lows and about half the industry average. More partners are getting the shifts they want. And more partners than ever recommend Starbucks as a great place to work.”
Bears vs. bulls
Niccol’s appointment initially thrilled buyers.
On the day that Starbucks introduced his hiring, shares of the corporate soared 24%, the perfect day ever for the inventory. Chipotle, Niccol’s then-employer, noticed its personal inventory shut down 7% that day, in one other demonstration of Wall Street’s appreciation for his management.
But 12 months later, some buyers appear to be dropping their religion in Niccol. Shares have fallen 7% during the last year, dragging the corporate’s market cap all the way down to $95.6 billion.
Investors anticipated the turnaround to bear fruit sooner. Store visitors and revenue margins are nonetheless removed from pre-Covid ranges. Wall Street anticipated same-store gross sales to develop once more by its fiscal second quarter resulted in March this year; now, most analysts aren’t projecting quarterly same-store gross sales progress till the tip of the calendar year.
And then there’s skepticism about Niccol’s broader technique.
“There’s still sort of question marks from investors on whether or not all this is going to work,” Reich mentioned. “I think there’s some questions around whether or not leaning into the ‘third place’ is going to work, just because you have to balance being a $100 billion company and also wanting to be the local coffeehouse vibe — and managing all that with mobile ordering, which is super high velocity.”
Zacks Investment Management bought off its Starbucks holdings about two years in the past, shortly earlier than its same-store gross sales started falling, in accordance with Brian Mulberry, senior portfolio supervisor on the funding agency. But he retains an eye fixed on the espresso chain, ready for Starbucks to as soon as once more drive quarterly earnings progress constantly.
“Our commitment is to keep Starbucks on our watch list for probably the next 12 months, to give them another year to see if there’s progress coming back,” Mulberry mentioned.
While now not a Starbucks shareholder, Mulberry is a loyal buyer. Through his travels, he experiences a variety of Starbucks experiences, whether or not he is in midtown Manhattan or Indianapolis.
“The consistency of the product is good, but the consistency of the service is still something that’s lacking,” he mentioned.
Plus, with few exceptions, Starbucks has given Wall Street little or no visibility into its monetary targets and the prices of the turnaround. In October, the corporate suspended its annual forecast by way of fiscal 2025, citing the latest CEO transition and the “current sate of the business.”
“It’s been hard to gauge where they are on their strategic path,” William Blair analyst Sharon Zackfia mentioned.
Starbucks has shared some numbers. In late July, the corporate mentioned it will make investments $500 million in labor over the subsequent year tied to its “Green Apron Service” mannequin.
“Clearly, there has been a lot, and there will continue to be a lot of incremental investments in labor,” Zackfia mentioned. “So our idea that the margin reset would be potentially deeper than investors had expected, I think that’s coming to fruition, maybe even more than we had expected honestly.”
But buyers will doubtless have to attend till Starbucks hosts its deliberate investor day in early 2026 earlier than they obtain solutions to most of their questions concerning the firm’s monetary targets.
The highway forward
A Starbucks retailer is proven in Encinitas, California, on Feb. 24, 2025.
Mike Blake | Reuters
Niccol nonetheless has loads of work to do.
He has teased innovation coming subsequent year, like improved pastries. By the tip of 2026, the corporate plans to provide makeovers to roughly 1,000 of its U.S. locations, including again extra seating and different small tweaks, like extra welcoming lighting.
And then there are modifications coming for Starbucks’ loyalty program. Niccol mentioned in July that Starbucks Rewards had grow to be too targeted on reductions, so he desires to tailor this system to encourage extra engagement from clients.
“I think many of us have thought for years and years and years that Starbucks had the gold standard of rewards programs,” Zackfia mentioned. “That is something that’s still very nascent, and many of us are still trying to figure out what that really means.”
The destiny of Starbucks’ enterprise in China continues to be up within the air, too. In October, the corporate mentioned that it was exploring strategic partnerships for its second-largest market, which has struggled ever for the reason that pandemic. After lockdowns abated, native rivals who can undercut the chain on pricing have stolen market share from the U.S. firm.
More not too long ago, Starbucks has mentioned that it has acquired “significant interest” from greater than 20 events. Reuters reported on Friday that bidders are valuing the corporate’s China unit at about $5 billion. Given the dimensions and progress potential of the enterprise, many count on that Starbucks will simply promote a stake within the division.
“Today we have 8,000 stores, and I think in the future, we have 20, maybe even 30,000 stores, in China,” Niccol informed CNBC within the interview that aired Tuesday. “Obviously, we’re working through what is the right partnership so that we can grow and capture that 20, 30,000 store opportunity.”
That type of long-term perspective additionally applies to Niccol’s broader technique for the corporate.
And buyers could should be affected person.
“It may be some time before Starbucks gets truly back to Starbucks,” RBC Capital Markets’ Reich mentioned.