Latest news with #Niccol
CNBC
5 days ago
- Business
- CNBC
Cramer rips Starbucks downgrade, argues for why investors should stay in the struggling stock
Jim Cramer on Thursday blasted a Wall Street downgrade of Starbucks that warned the coffee giant's turnaround could take longer than expected and weigh on earnings. Jim didn't mince his words when defending Starbucks CEO Brian Niccol's ability to claw the coffee giant out of declining sales, operational issues and a negative perception of the brand. "A bet against Brian Niccol, what am I going to send you? An invitation to your funeral," Jim said on CNBC, reprising a common phrase he's used over the years when disagreeing with an analyst call. Niccol, the former Chipotle chief, has been in his new role leading Starbucks for roughly nine months. Niccol's tall task: Reinvigorating the iconic coffee brand in its core North American market, while resuscitating its business in the long-term growth market of China, which has struggled amid fierce local competition. TD Cowen, however, is skeptical that it can be done on a reasonable timeline — while still delivering the kind of profits that investors want to see. The firm downgraded Starbucks to hold from buy and maintained its price target of $90 per share. Starbucks shares fell around 2% Thursday to roughly $84 per share following the downgrade. Year to date, the stock is down 7%. Starbucks is "settling into a new base of earnings that differs from consensus," analysts wrote in their note to clients. A key reason why, they argued, is Niccol's labor investments into its stores, which may limit the company's earnings power. Starbucks' weaker-than-expected earnings report in late April earnings report showed a steep year-over-year contraction in operating margin, due in part to additional labor to support Niccol's "Back to Starbucks" strategy. Niccol argues that well-staffed stores, with less employee turnover, are necessary to deliver a great customer experience and ensure that long wait times do not deter would-be customers. In particular, Starbucks is aiming to serve customers their drinks in four minutes or less, and Niccol said on the April earnings call that early returns from staffing pilot programs are promising. SBUX YTD mountain SBUX stock performance. Nevertheless, backing its cautious stance, TD Cowen cited proprietary survey data showing "deteriorating value perceptions" and "narrowing quality perceptions for Starbucks relative to peers." The firm warned that this is leading to reduced traffic from customers who were visiting at least weekly. These data points inform TD Cowen's view that Starbucks' same-store sales recovery in North America in the coming years will not progress as fast as Wall Street currently expects. Now layer in the higher labor expenses, and analysts believe that Starbucks will struggle to meet expectations on earnings growth in the 2026 to 2028 timeframe. Despite the headwinds, Jim remains optimistic. He pointed to Niccol's track record as a "foremost turnaround artist," crediting him for rescuing Chipotle from a deep reputational crisis tied to food safety concerns. Right now, Jim argued Niccol is in the thick of doing that at the American coffee chain, though he acknowledged Starbucks is facing a different set of challenges than Chipotle. There are some relevant lessons, though. As it relates to the balancing act between investment and profitability, Jim sees Niccol striking it prudently just as he did as Chipotle CEO. "Brian Niccol understood the labor problems when he took over at Chipotle and he dealt with them very effectively. There's no reason he can't do that here," Jim said on Thursday's Morning Meeting. Jim acknowledged that turnarounds take time and rarely unfold perfectly, but he cautioned against trying to time the market. He doesn't want to play the trading game of trying to exit the stock due to fears it will go lower because there's no guarantee of being able to get back in before the rally takes hold. Instead, Jim prefers to stay long Starbucks awhile awaiting additional progress on the turnaround. (Jim Cramer's Charitable Trust is long SBUX. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Yahoo
27-05-2025
- Business
- Yahoo
Starbucks needs a new pilot for its company private jets, and is offering a salary of up to $360,000
Starbucks posted a job listing for a pilot with a salary of up to $360,300. The company is looking for someone qualified to fly the latest Gulfstream business jets. Starbucks previously made headlines by offering its aircraft for its CEO's 1,000-mile commute. Pilots looking for a new job could soon land an enviable role at Starbucks. The Seattle-based coffee company last Friday posted an ad for a captain — with a salary ranging from $207,000 to $360,300. According to the Bureau of Labor Statistics, the average airline pilot earns $280,000. Starbucks is looking for someone with 5,000 total flight hours and five years' experience in a corporate flight department. The ideal candidate would also have a G-VI or G-VII type rating, meaning they're qualified to fly the newest Gulfstream private jets. Of course, it's not just technical skills that make a great pilot. The listing says the captain would serve as a "Starbucks ambassador both at home and abroad," calling for someone who acts with "tact and decorum." The role also requires assisting in handling passengers' bags and establishing security when away from the home base, not to mention the ability to travel extensively. "Captains work closely with other crew members, dispatch, maintenance, and line personnel, in the planning and execution of flight operations and fulfilling the air transportation needs for Starbucks Aviation," the listing adds. Anyone interested in the role doesn't have long to apply, with the posting set to expire on Thursday. Starbucks' aviation department previously made headlines last year. When the company offered the CEO role to Brian Niccol in August, it said he wouldn't have to relocate to Seattle but could instead commute the 1,000 miles from Newport Beach, California. The offer letter added that Niccol could use Starbucks' corporate aircraft for his commute. At the time Niccol was appointed, Starbucks told Business Insider he would spend the majority of his time in the company's Seattle HQ. Starbucks also said in the offer letter that it would set up a small office for Niccol in Newport Beach, and that he could use its aircraft for personal travel worth up to $250,000 a year. Read the original article on Business Insider Sign in to access your portfolio
Business Insider
27-05-2025
- Business
- Business Insider
Starbucks needs a new pilot for its company private jets, and is offering a salary of up to $360,000
Pilots looking for a new job could soon land an enviable role at Starbucks. The Seattle-based coffee company last Friday posted an ad for a captain — with a salary ranging from $207,000 to $360,300. According to the Bureau of Labor Statistics, the average airline pilot earns $280,000. Starbucks is looking for someone with 5,000 total flight hours and five years' experience in a corporate flight department. The ideal candidate would also have a G-VI or G-VII type rating, meaning they're qualified to fly the newest Gulfstream private jets. Of course, it's not just technical skills that make a great pilot. The listing says the captain would serve as a "Starbucks ambassador both at home and abroad," calling for someone who acts with "tact and decorum." The role also requires assisting in handling passengers' bags and establishing security when away from the home base, not to mention the ability to travel extensively. "Captains work closely with other crew members, dispatch, maintenance, and line personnel, in the planning and execution of flight operations and fulfilling the air transportation needs for Starbucks Aviation," the listing adds. Anyone interested in the role doesn't have long to apply, with the posting set to expire on Thursday. Starbucks' aviation department previously made headlines last year. When the company offered the CEO role to Brian Niccol in August, it said he wouldn't have to relocate to Seattle but could instead commute the 1,000 miles from Newport Beach, California. The offer letter added that Niccol could use Starbucks' corporate aircraft for his commute. At the time Niccol was appointed, Starbucks told Business Insider he would spend the majority of his time in the company's Seattle HQ. Starbucks also said in the offer letter that it would set up a small office for Niccol in Newport Beach, and that he could use its aircraft for personal travel worth up to $250,000 a year.
Miami Herald
22-05-2025
- Business
- Miami Herald
Starbucks raises red flag on wrong problem
Starbucks has already taken something with a quirky history - the coffee shop - and brought a level of corporate uniformity to it. That can be a positive as local coffee shops often have poor training, inconsistent recipes and questionable coffee. There are, of course, some amazing local coffee shops, but it's a risk every time you walk into one while Starbucks delivers the same experience no matter where you might be. Related: Starbucks faces huge new rival There's a strong positive in keeping the food and beverage experience at every Starbucks. That brings customers in because they know their latte, Frappuccino, Pink Drink, or anything else they might order will be exactly as expected no matter where they might be. Starbucks (SBUX) CEO Brian Niccol, however, has gone too far in homogenizing the coffee chain's experience. He has instituted a new dress code, which went into effect earlier this month that limits what workers can wear under their green aprons to a solid black shirt and khaki, black, or blue denim pants. Don't miss the move: Subscribe to TheStreet's free daily newsletter That's a change from the past when baristas could wear any colored shirt as well as a wider range of pant colors, including brown, navy, and gray. It's a move that removes some of the personality from the chain's workers, which harms the Starbucks experience. Image source: Getty Images While Starbucks is a national chain, its stores are local businesses, part of the community. Baristas build relationships with customers through their personalities. Niccol, and his predecessors, have worked to bring new technology to Starbucks cafes that make it easier to produce drinks. That should, in theory, free up workers to build meaningful connections with customers, Yes, there might be some tiny percentage of the coffee chain's audience that gets offended when a barista used their clothing to express something personal, Most cafe visitors, however, either did not notice or simply noted it as part of the unique person taking care of their coffee order. At my local Starbucks, the guy on the headset at the drive-through greets you with exuberance, and has used a Dracula voice and Grover from Sesame Street at various times. I've seen him in costumes, wearing Christmas gear when it wasn't Christmas, and otherwise expressing himself. He's charming and asks where I have been when I haven't visited in a while. It's a small thing, but he serves as a likable face of the cafe who welcomes people in. More Retail News: After closing stores, Walmart makes a big additionFormerly bankrupt restaurant chain reopens locations, adds new itemPopular breakfast chain goes national with surprising deal Forcing employees who do a difficult, physically intense job to give up some of their personality hurts Starbucks. Coffee is a beverage about connections and connecting with store workers is part of that process. Yes, it's important to deliver a consistent experience, but that should be about coffee and food, not stopping workers from wearing shirts that express their quirkiness, individuality, or even sexuality. While unions representing Starbucks workers think this issue should be collectively bargained, the retail experts who make up the commenting community at RetailWire seem to largely agrees with Starbucks. "Starbucks owns the business; it is up to Starbucks to set the policy. If unions want to set the policy, they should establish their own company. And I actually don't think the request is too onerous, especially when Starbucks are offering free shirts to employees and there is still flexibility in what can be worn," Global Data Managing Director Neil Saunders wrote. Cathy Hotka agrees. "Mandating a black top is an easy ask. Associates can express themselves in any way they want, as long as the top is black. I don't see a problem," she shared. Georganne Bender similarly misses the point. "Every business has the right to implement a dress code that represents their brand. Requiring baristas to wear black shirts under their green aprons is not asking too much," she wrote. That's correct. Starbucks can do it. Paula Rosenblum, however, actually understands the business the coffee company is in. "You know, if a big problem is that your business is commodifying (and Starbucks is) while remaining overpriced, putting every employee in the same clothes just emphasizes the sea of sameness. Eclectic is in. There is nothing eclectic about today's Starbucks," she wrote. "...So I think the focus is all wrong. Sorry." Allison McCabe backs that up. "My big focus at Starbucks is hoping that the coffee I ordered on the mobile app is there and actually IS what I ordered. All for creative expression as long as the job is done well!" she added. Starbucks benefits from its workers being people with personalities, not robots who hand you coffee. Yes, some people just want their drinks with minimal interaction, and that's certainly an experience you can have by ordering through the app. Related: Forget Starbucks, these coffee chains are taking over consumers In a world that's becoming increasingly automated, human interaction and a chance to build connections with customers has actual value. Niccol is seeking to get rid of that because some tiny percentage of customers might be offended by a rainbow shirt or some other subtle personal expression. It's a mistake and Starbucks actually surrendering a competitive advantage. The chain attracts smart workers who often have personalities which help them connect with customers. Dialing that back by making everyone dress the same makes it that much easier for customers to opt to get coffee at the dozens of other drab, soulless chains where workers act like drones. The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.
Business Insider
17-05-2025
- Business
- Business Insider
Starbucks doubles down on baristas, not AI, to fix its customer crunch
AI is taking drive-thru orders at Wendy's, and Chipotle uses machines to prep avocados for its guacamole. Starbucks, however, is turning to a different solution: People. The coffee chain said in its latest earnings report that it plans to staff up its stores over the next several months. The reason: The efficiency-oriented machines that it's spent the last few years using just weren't good enough at speeding up drink production as good ol' humans. Some of the additional staffing will involve hiring more baristas, a company spokesperson said. In other cases, Starbucks will give additional shifts to existing baristas or pull in workers from one store to fill in at another to fill in. "They're realizing that there's more to it, and solving some of the throughput and other experience issues they need to fix is going to require more labor," said R.J. Hottovy, the head of analytical research at As it staffs up stores, Starbucks is also rolling out a new algorithm that will determine the order in which baristas make drinks. That will help baristas make drinks more efficiently with those extra shifts, the company has said. By the end of September, the new labor model and the algorithm will be in about 3,000 US stores, Niccol said on last month's earnings call. Starbucks provides a counter-example to a broader restaurant industry trend. While many other chains are automating processes, especially with AI, the Seattle-based company is acknowledging that there might be limits to what machines can do. At Starbucks, machines haven't been as effective as people Over the last few years, Starbucks rolled out the Siren System, which made a series of equipment and process improvements meant to speed up the production of cold beverages like frappuccinos. At the end of April, though, CEO Brian Niccol said that Starbucks would halt the system's use as it invested more in adding shifts for its baristas. "We're finding through our work that investments in labor rather than equipment are more effective" at making orders quickly, Niccol said during the company's earnings call. The additional workers also mean that store employees are "able to greet customers, hand off orders personally, be available for customer questions and requests, and more," Starbucks said. "Customers appreciate these memorable, more personal moments in our community coffeehouses." Earlier this year, Starbucks tried out the additional baristas at 700 stores, Niccol said on the company's earnings call. Those stores saw a growth in transactions, he added. Still, spending more on people has its risks. Starbucks will have to make the additional shifts work across in-store, pick-up, and drive-thru orders, said Sujay Saha, founder and president of Cortico-X, a consulting firm focused on customer experience. Some baristas have told BI that their stores have been overwhelmed by the number of orders that they have to fill, especially those that customers place through the Starbucks mobile app. Niccol has said that he wants Starbucks to provide both quick coffee and food to go as well as more personal service for customers who want to hang out in-store. "That is an experience that some customers need," Saha said of Niccol's focus on connections between patrons and baristas. "But some customers just need to get the coffee and head out." More baristas could improve Starbucks' customer experience Some baristas told Business Insider that they are skeptical that the extra workers will make a difference. The baristas declined to be identified by name, citing potential retaliation from Starbucks, but BI has verified their identity and work for Starbucks. One Starbucks worker at a store in New Mexico said that she and her colleagues are overwhelmed and need the extra shifts — something that's apparent to store visitors and could deter job applicants. "People know they're going to be overwhelmed, overworked, and under-compensated," the employee said. Another barista, based in a store in Ohio, said that the additional staffing are welcome news since their manager usually steps in to help when they are understaffed during a busy period. "The only day my store manager was not on the floor working with us were Monday's," the employee said. Another employee, who works at a store in North Carolina, said that the location is struggling to keep employees between understaffing and recent changes to Starbucks' dress code. "I'll believe it when I see it," the employee said when asked about Niccol's announcement of additional shifts. Employing people still costs money. Starbucks' shares dipped roughly 7% as the company announced the additional investment in labor. Executives said that they plan to offset the costs by applying zero-based budgeting to Starbucks' expenditures. The measure determines spending by asking managers to justify each expense rather than using last year's budget as a baseline. Paying for more person-power isn't cheap, but it does fit in with Niccol's goal of making Starbucks a place that customers want to keep coming back to, Hottovy said. Visits to Starbucks stores fell 0.9% in the first quarter, according to foot traffic data from Additional staffing — and better customer service — could get patrons to stop by more frequently, Hottovy said. "At the end of the day, it's really your employees that make the experience," he added.
