Starbucks CEO pushes 'Green Apron' service changes to all North American stores by summer
Starbucks CEO pushes 'Green Apron' service changes to all North American stores by summer
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Starbucks hosted the inaugural Global Barista Championship in Las Vegas featuring baristas from around the world.
Starbucks SBUX.O CEO Brian Niccol told Reuters on Tuesday that he would accelerate the rollout of the coffeehouse chain's new staffing and service model, aiming for all North American stores by summer's end, rather than the initial plan for just a third of U.S. stores by fiscal year-end.
The plan applies to the more than 11,000 company-owned stores in North America, rather than the roughly 18,000 combined company-owned and licensed stores, Starbucks said.
Niccol says the model is a foundational element of his turnaround strategy for the company, as he bets on an improved in-store customer experience to reclaim the sales growth that has eluded Starbucks in recent quarters.
Niccol said early tests of the model have sped up service times and grown sales, without providing specifics. 'We've learned, and now we know what we need to do, so let's scale it,' he told Reuters at the company's three-day leadership summit in Las Vegas on Tuesday.
The Green Apron model includes in-store technology to more efficiently sequence orders, as well as a dedicated barista for drive-through orders. Starbucks rolled out the service changes to 700 stores initially. During the company's April 29 quarterly earnings call, Niccol said it would be introduced in a third of U.S. stores by fiscal year-end.
Niccol took over as Starbucks CEO in September with a plan to return the chain to its coffeehouse roots, focusing on the in-store experience and away from a reliance on mobile and to-go orders, in what the company calls "Back to Starbucks.' The goal is to get baristas to get customers their orders in four minutes or less.
He did not share any financial figures about the cost of the Green Apron model's deployment, but said the company would host an investor day in 2026. The Las Vegas summit, the company's first since 2019, is hosting more than 14,000 managers and other company leaders.
Analysts and investors have wondered how long Niccol will need to turn the company around. Shares have gained 11% over the last five years, compared with an 88% rise in the broad-market S&P 500. TD Cowen recently downgraded its rating of Starbucks to "hold" from "buy", saying in part that it believed Niccol's turnaround would take longer than expected to deliver results.
Niccol said the transition will take time. Starbucks has not issued annual guidance, and Niccol told investors in an earnings call earlier this year that earnings-per-share 'shouldn't be used as a measure of our success' at this stage, instead pointing to in-store metrics like average wait times for orders. He said the transition's effect on earnings would be temporary.
On Tuesday, he emphasized his goal isn't to achieve short-term performance solely through cost reduction. As Starbucks increases investments in its labor and elsewhere, Niccol said he would be "ruthless" in cutting expenses not related to the company's turnaround. 'We have to be critical of where we're spending if it's not driving toward the Back to Starbucks strategy and growth programs.'
Reporting by Waylon Cunningham; Editing by Lisa Shumaker
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