With the increasingly complex challenges facing global operations, Starbucks has once again welcomed a new leader.
On September 11th, Brian Niccol, the chairman and CEO of Starbucks who had been in office for two days, issued an open letter, conveying a signal from Starbucks management about the future direction of development.
Regarding store operations, Nicole said that Starbucks will return to its original intention of being a cozy caf é where people gather, and improve service quality to enhance customers' sense of ceremony in starting their day with Starbucks coffee in the morning. Meanwhile, Nicole stated in an open letter that the US market is currently her top priority.
This is basically consistent with the philosophy of Starbucks founder Howard Schultz. In the first half of the year, Schultz stated on social media that Starbucks' rectification needs to start from the domestic (US) market, and the US business is the main reason for the company's decline. Stores need to focus on customer experience from a merchant's perspective, with full attention
For decades, in addition to coffee shops, Starbucks' image as a pleasant "third space" outside of homes and offices has deeply penetrated people's hearts, providing customers with sufficient emotional value. A consumer told Time Finance that despite being surrounded by low-priced coffee such as Luckin Coffee, they are still willing to choose Starbucks. One of the reasons is that they expect the same order retrieval password as opening a blind box every morning, which is "full of ceremony and can also give people strength
But currently, in markets including the United States, Starbucks is facing challenges such as complex menus, inconsistent products, and long waiting times, all of which are challenging Starbucks' proud sense of ceremony and experience.
At the same time, as Starbucks' first and second largest markets, both the US and China have experienced varying degrees of stagnation in their operations. In the third quarter of fiscal year 2024 ending June 30, Starbucks (NASDAQ: SBUX) consolidated net revenue of $9.114 billion, a year-on-year decrease of 1%; The net profit was 1.055 billion US dollars, a year-on-year decrease of 7.6%.
Among them, Starbucks' total revenue in the North American market was 6.817 billion US dollars, a year-on-year increase of 1.17%; The operating profit was 1.433 billion US dollars, a year-on-year decrease of 2.12%. Starbucks China's revenue decreased by 10.71% year-on-year to $734 million.
In the past few years, Starbucks has responded to market changes by changing its leadership. Since March 15, 2022, when CEO Kevin Johnson announced his retirement, Starbucks has entered a period of frequent changes in leadership. In April 2022, Howard Schultz was appointed as interim CEO, and in April of the following year, Laxman Narasimhan took over as CEO. Nicole is the fourth CEO of Starbucks in three years.
Schultz had great expectations for his arrival. He wrote on Starbucks' official website, "I believe that at this critical moment in Starbucks' history, he is the leader that Starbucks needs. I respect him and fully support him
The leader who parachuted into Starbucks has extensive experience in the fast-moving consumer goods and catering industries. Nicole joined Procter&Gamble in 1996 and has been working at this globally renowned fast-moving consumer goods company for nearly 10 years. In 2005, he joined Yum! Brands, served successively as the management of Taco Bell and Pizzahut under Yum! Brands, and became CEO of Chipotle, a world-famous restaurant, in 2018.
Flipping through Nicole's past resume, it is not difficult to find that he has the ability to take orders in times of crisis and turn the tide.
During his tenure as CEO of Taco Bell from 2015 to 2018, Taco Bell was facing fierce price wars from peers such as McDonald's. On the one hand, Nicol is creating a $1 "high cost performance SKU", and on the other hand, developing a new flagship product, Doritos corn tortillas, and launching a mobile ordering application, opening up the brand's online process and successfully resolving competitive attacks.
In 2018, Nicole took over as CEO of Chipotle. At that time, this chain restaurant positioned as a Mexican leisure fast food was involved in a safety crisis, and a few years ago, this restaurant also encountered a similar crisis. The management saved its performance by reducing prices and promoting sales, but the effect was not significant.
After Nicole took office, she stopped her promotional strategy and developed new products such as grilled meat and corn tortillas. She also vigorously developed her online ordering business through a mobile app, which provided Chipotle with a large number of takeaway orders. From 2018 to 2023, Chipotle's revenue grew by nearly $10 billion.
And the current Starbucks is somewhat similar to Chipotle when Nicole first took over. In the Chinese market, Starbucks has been surrounded by low-priced products such as Luckin Coffee, and is also using discount coupons to retain consumers. This situation also occurs in the US market. However, in the third fiscal quarter, the average passenger flow in the US market still decreased by 6%.
At present, Nicole's first 100 days in office will mainly focus on the domestic market in the United States. For the Chinese market, it stated in an open letter that 'we need to understand the potential avenues for growth and fully leverage our strengths in this dynamic market'.
Although there have been no further substantive actions, this helmsman with several experiences in turning the tide has raised new expectations for Starbucks from the outside world. Since announcing his appointment on August 13th, Starbucks' stock price has risen by approximately 20%.