Starbucks' CEO looks to snap sales slump with prices and protein
Despite price pressures from tariffs and an extended sales slump, Starbucks CEO Brian Niccol said he is optimistic the company is on the comeback trail.
'I'm genuinely excited about the opportunity for our company,' Niccol told NBC News' Hallie Jackson in an exclusive interview.
Niccol is known as a turnaround expert, given his experience running Chipotle, which thrived under his watch. He's looking to replicate that success at Starbucks, the biggest coffee company in the world with 32,000 locations and $36 billion in annual revenue as of the last fiscal year.
Competition from the likes of Dunkin', McDonald's and Dutch Bros. has taken a toll on Starbucks, as has consumers' weariness of stubborn inflation and rising prices. The company's same-store sales have fallen for five straight quarters, and it announced in April that its profit was cut in half compared to a year earlier.
Since taking over in September, though, Niccol has rolled out changes to Starbucks' business model — cutting 30% of its menu, requiring customers buy a menu item to sit in its stores and introducing a new 'green apron' service model which uses an algorithm to help baristas sequence orders. Starbucks' stock is on the upswing since the company's lackluster earnings report in late April. Its growth this year has outpaced gains in the broad S&P 500 stock index.
Niccol pinned the company's recent struggles on a lack of focus on customers' experience.
'We veered away from, I think, owning the idea of the third place, the coffeehouse experience, making sure that the customer was front and center,' Niccol said.
Prices are a big part of his proposition to customers, as well.
'That was our commitment. For this fiscal year we're not moving on prices. What I can't commit to is where the future goes,' Niccol said. Starbucks' fiscal year concludes at the end of September.
'But what I definitely can commit to,' he added, 'is we're gonna give people a great experience so that what you get for what they pay, they feel like they got a great value.'
Starbucks is introducing some targeted new products, including a new protein vanilla latte this week in select stores. There's also a chance, according to Niccol, that Starbucks may roll out trendy mushroom-infused coffees in future.
Niccol acknowledged the company will continue to deal with external challenges — especially from Washington. President Donald Trump's uniform 10% tariff on all imports will likely raise the cost of Starbucks' raw coffee beans, which Niccol said 'frankly cannot be grown in the United States.'
But Niccol is confident Starbucks can withstand any additional costs.
'The thing that's great about Starbucks is we're a global company. We're an iconic brand,' Niccol said. 'We have the flexibility and scale to navigate wherever these policy changes go.'
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