'We Need…To Win Back Customers' Starbucks (NASDAQ:SBUX) Puts New Focus on Customer Recovery

Business Insider

18 hours ago

There are many things that one could say about coffee giant Starbucks (SBUX). Maybe you like the atmosphere, the décor, the sound of smooth jazz playing in the background while you drink your coffee. Or maybe you find it an overpriced corporate nightmare that serves coffee that cannot stop tasting burnt. But there is a good chance you have not been to one lately, and that is a development Starbucks is out to change at all costs. This came as a 'too-little-too-late' assessment for investors, though, and they sent shares into open decline, dropping 2% in Monday afternoon's trading.
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Starbucks has made several advances since last August, when Brian Niccol declared 'Back to Starbucks' a thing. Niccol confidently declared that his '…experience tells me that when we get back to our core identity and consistently deliver a great experience, our customers will come back.' Indeed, the logic was sound; one study found that 78% of Gen Z respondents preferred spending on experiences rather than products. Thus, putting more effort into improving the experience was likely worthwhile.
However, a problem emerged that not even Niccol may have foreseen. Specifically, that problem was a decline in overall spending, and particularly on 'unnecessary' items as uncertainty in the economy took over. Back in November 2024, Starbucks reported a drop in operating income worth around 22% of the previous total, and this was despite opening 722 new stores. But not every change is being welcomed; Niccol insisted on bringing back writing on cups, but baristas panned the practice as a time sink that slows down operations to deliver a service customers do not particularly want.
Keep the Drinks Coming
Despite plans to simplify the menu, Starbucks is also rolling out new drinks with almost alarming frequency. One new drink was recently revealed: a Raspberry Cream cold brew that is expected to hit July 28. That will feature Starbucks' cold brew coffee backed up with vanilla syrup and topped off with 'raspberry cream cold foam.'
Plus, new reports note that the 'secret menu' is now mainstream, complete with a contest and a cash prize. Built into the 'Offers' tab of the Starbucks app, customers can order 'secret menu' items created by customer hacks. Among the new drinks are 'cookies on top,' a cold brew with vanilla syrup, vanilla sweet cream cold foam, and topped off with crumbled cookie bits. Also up is the 'dragonfruit glow-up,' which begins with the Mango Dragonfruit Lemonade Refresher, and adds peach juice and vanilla sweet cream cold foam as well.
Is Starbucks Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on SBUX stock based on 13 Buys, 11 Holds and one Sell assigned in the past three months, as indicated by the graphic below. After a 30.5% rally in its share price over the past year, the average SBUX price target of $95.64 per share implies 2.73% upside potential.