Latest news with #BacktoStarbucks
Business Insider
02-05-2025
- Business
- Business Insider
Starbucks is embracing a tough cost-cutting method that's led workers elsewhere to bring their own coffee to work
Starbucks is planning to use a cost-cutting method with a tough reputation as it continues its turnaround. The method, called zero-based budgeting, asks managers to justify every item they spend on each year, instead of using the previous year's spending as a baseline as many companies do. Starbucks executives say ZBB will help them find savings as they spend more on their Back to Starbucks plan, including paying for more hours for the baristas who staff its stores. "We're going to be looking at ways to grow the business and also take a really hard look through the zero-based budgeting approach to understand where else there might be some offsets," CEO Brian Niccol said during the company's earnings call on Tuesday. "I love deploying a few tools like zero-based budgeting" to "help us get after some of those maybe-stranded costs," CFO Cathy Smith, who joined Starbucks in the last few weeks, also said on the call. A Starbucks spokesperson did not respond to questions about how the company planned to use zero-based budgeting. ZBB gained popularity in the 1970s, thanks in part to former president Jimmy Carter, who advocated — ultimately unsuccessfully — for its use by the federal government. More recently, some major brands have adopted the strategy. Private equity firm 3G Capital has deployed the method at Stella Artois-maker AB InBev and Kraft Heinz, the company that makes Oscar Mayer and Lunchables, for instance. The strategy, which includes moves like making all senior execs fly coach class even over long distances, did lower costs and improve the companies' margins. But in some cases, the spending cuts were so severe that it made it tough for employees to do their jobs, Business Insider reported in 2021. One employee, who had recently left Kraft Heinz at the time, told BI that she could only spend $5 annually on office supplies. She also had to bring in her own Keurig pods from home since the company, which makes Maxwell House coffee, provided no coffee in the office break room. Other Kraft Heinz employees told BI that strict spending controls hampered the development of new products and ultimately made it less competitive. Some companies have adopted the method at key turning points. Managers at X, formerly known as Twitter, reportedly had to use zero-based budgeting after Elon Musk bought the company in 2022, for instance. And in 2020, General Motors implemented ZBB as a way to manage its way through disruptions caused by the pandemic. The company temporarily cut spending by slashing advertising and furloughing some employees, then-CFO Dhivya Suryadevara said at an investor conference.
Yahoo
30-04-2025
- Business
- Yahoo
Starbucks sees Q3 topline following normal seasonality
Says will 'take time' for Back to Starbucks (SBUX) strategy to be fully implemented at all U.S. stores. Says mobilized cross-functional team to mitigate risks associated with tariffs where possible. Says majority of supply coming from Latin America. Says actively working on strengthening supply chain amid tariffs as needed. Says looking to shift merchandise production, which is largely done in China, to other sites. Discover companies with rock-solid fundamentals in TipRanks' Smart Value Newsletter. Receive undervalued stocks, resilient to market uncertainty, delivered straight to your inbox. Published first on TheFly – the ultimate source for real-time, market-moving breaking financial news. Try Now>> See the top stocks recommended by analysts >> Read More on SBUX: Disclaimer & DisclosureReport an Issue Starbucks says putting the customer back at the center of the business Starbucks says non-rewards member traffic stabilizing Starbucks says 'better measures than EPS' to track progress Starbucks reports Q2 adjusted EPS 34c, consensus 48c Starbucks CEO: Back to Starbucks plan the right strategy to turn around busines Sign in to access your portfolio
Yahoo
30-04-2025
- Business
- Yahoo
Starbucks' Turnaround Will Hinge Less on Equipment and More on Staff, CEO Says
Starbucks CEO Brian Niccol said recent earnings were disappointing, but he's confident the company's Back to Starbucks turnaround campaign is working. The cafe chain is using algorithms and new labor models to speed up service, and no longer sees high-tech Siren equipment as a broad solution, Niccol said. The business still aspires to be an hangout destination and is redesigning stores with that goal in mind, he Starbucks comeback campaign has created a sense of calm in coffeehouses, according to CEO Brian Niccol, who is confident the company will soon cash in on the vibe shift. The shares, meanwhile, need to stage a comeback of their own. Seven months into a turnaround plan, Starbucks (SBUX) handed in earnings Tuesday that disappointed investors, Niccol said on a conference call. Still, Niccol said the Back to Starbucks campaign was showing signs of progress—more customers are hanging out in stores and transaction declines are slowing—and guiding the company's evolution. Looking ahead, he said, Starbucks will rely more on employees and less on equipment, explore baking items in stores, and consider a new afternoon menu. An algorithm that sequences orders for baristas has been piloted in 400 stores and will be expanded to others, according to Niccol. The tool has helped many stores serve drive-thru and in-store customers in less than four minutes and fulfill mobile orders within 12 minutes, Niccol said. These benchmarks were established to ensure mobile orders don't pile up on the counter, while lines grow and disrupt the store atmosphere, Starbucks has said. 'It's just a lot calmer,' Niccol said of algorithm-driven workflow shifts, according to a transcript made available by AlphaSense. 'Partners are set up for success to connect and do their craft with our customers on every transaction." The chain has cut turnover by making it easier for employees to pick up and trade shifts, according to Niccol. Starbucks will be relying more on staff, he said, and less on high-tech equipment, such as the Siren drink-making system, which will be used selectively rather than broadly rolled out. 'Over the last couple of years, we've actually been removing labor from the stores, I think, with the hope that equipment could offset the removal,' Niccol said, according to the transcript. 'That wasn't an accurate assumption." Starbucks wants customers to spend time in stores, and is increasing free refills as an incentive. The company is also revamping store designs to include different seating, which will soon debut in New York City and Southern California, Niccol said. (Other recent adjustments to the vibe include changes to the dress code and more handwritten messages on cups.) Cafe locations in the United Kingdom have baked and assembled food served in the store—a move Starbucks may try in the United States as it works to finesse its food and beverage offerings, Niccol said. Starbucks is also exploring an afternoon menu 'that includes sparkling beverages, sippable coffee drinks, and snackable bites,' Niccol said. While shares of Starbucks jumped after Niccol joined last year from Chipotle, they've more recently fallen—and are substantially closer to 52-week lows than highs. Read the original article on Investopedia Sign in to access your portfolio
Yahoo
30-04-2025
- Business
- Yahoo
Starbucks Q2 Comps Miss Sparks Analyst Pushback
Starbucks (NASDAQ:SBUX) slid in early trading after Q2 comparable sales fell short of expectations, even as management touted progress in its Back to Starbucks turnaroundhighlighting smoother store operations, deeper customer engagement and a long-term setup in China. Global comps dropped 1%, with North American sales down 1% and U.S. units off 2%, offset slightly by higher average tickets. CEO Laxman Narasimhan and his team stressed on the earnings call that new barista training, digital-order enhancements and expanded loyalty perks are taking hold, and they pointed to China's flat comps as evidence the recovery plan can work in tougher markets. Wall Street's verdict was swift. Goldman Sachs cut its rating to Neutral from Buy, warning of too many near-term headwinds and fading share-gain momentum. TD Cowen's Andrew Charles kept a Buy but trimmed his price target to $90 from $102, now modeling a more balanced recovery in 202627 instead of an earlier rebound. Morgan Stanley's Brian Harbour remains Overweight with a $95 target but quipped that patience will be required, noting bears calling for a longer turnaround timeline had it right this time. Jefferies' Andy Barish dropped to Hold, citing persistent brand challenges and a cautious consumer backdrop, while BTIG's Andrew Strelzik slashed near-term forecasts and cut his target to $100, saying EPS pressure is likely greater and more prolonged than once expected. Investors should care because Starbucks' valuation espeically if comps keep lagging and analysts further shave forecasts, the stock could sink back toward its five-year average. Moreover, with Q3 comparable-store sales and updated guidance due in late July, markets will be watching whether the Back to Starbucks plan can regain momentum or if SBUX needs to adjust its playbook once more. As a recap, Starbucks missed Q2 earnings expectations with non-GAAP EPS of $0.41 and revenue of $8.76 billion, both below estimates. Global same-store sales fell 1%, driven by a drop in transactions, while North America comps slipped 1% and U.S. sales declined 2%. International markets grew modestly, with China flat. The company added 213 stores, reaching 40,789 globally. Despite traffic challenges, Starbucks declared a $0.61 dividend for May, signaling continued shareholder focus amid slower post-pandemic recovery in footfall and top-line growth. This article first appeared on GuruFocus. Sign in to access your portfolio
Yahoo
30-04-2025
- Business
- Yahoo
Starbucks Q2 Comps Miss Sparks Analyst Pushback
Starbucks (NASDAQ:SBUX) slid in early trading after Q2 comparable sales fell short of expectations, even as management touted progress in its Back to Starbucks turnaroundhighlighting smoother store operations, deeper customer engagement and a long-term setup in China. Global comps dropped 1%, with North American sales down 1% and U.S. units off 2%, offset slightly by higher average tickets. CEO Laxman Narasimhan and his team stressed on the earnings call that new barista training, digital-order enhancements and expanded loyalty perks are taking hold, and they pointed to China's flat comps as evidence the recovery plan can work in tougher markets. Wall Street's verdict was swift. Goldman Sachs cut its rating to Neutral from Buy, warning of too many near-term headwinds and fading share-gain momentum. TD Cowen's Andrew Charles kept a Buy but trimmed his price target to $90 from $102, now modeling a more balanced recovery in 202627 instead of an earlier rebound. Morgan Stanley's Brian Harbour remains Overweight with a $95 target but quipped that patience will be required, noting bears calling for a longer turnaround timeline had it right this time. Jefferies' Andy Barish dropped to Hold, citing persistent brand challenges and a cautious consumer backdrop, while BTIG's Andrew Strelzik slashed near-term forecasts and cut his target to $100, saying EPS pressure is likely greater and more prolonged than once expected. Investors should care because Starbucks' valuation espeically if comps keep lagging and analysts further shave forecasts, the stock could sink back toward its five-year average. Moreover, with Q3 comparable-store sales and updated guidance due in late July, markets will be watching whether the Back to Starbucks plan can regain momentum or if SBUX needs to adjust its playbook once more. As a recap, Starbucks missed Q2 earnings expectations with non-GAAP EPS of $0.41 and revenue of $8.76 billion, both below estimates. Global same-store sales fell 1%, driven by a drop in transactions, while North America comps slipped 1% and U.S. sales declined 2%. International markets grew modestly, with China flat. The company added 213 stores, reaching 40,789 globally. Despite traffic challenges, Starbucks declared a $0.61 dividend for May, signaling continued shareholder focus amid slower post-pandemic recovery in footfall and top-line growth. This article first appeared on GuruFocus. Sign in to access your portfolio
