Starbucks’ new CEO this week announced a series of changes aimed at luring customers away as the company faces unionization pressures, declining foot traffic and frequent leadership changes.

Brian Niccol I took over as CEO In September, he told analysts on this week’s earnings call that the company’s financial results were “very disappointing,” with sales at its U.S. stores having been open for at least a year, driven by a 10% decline in transactions.

Niccol emphasized the need for the company to return to its roots as a coffeehouse.

“It is clear that we need to fundamentally change our strategy to win back customers and return to growth. back to Starbucks “We must return to what has always made Starbucks different: a welcoming coffeehouse where people come together and serve the best coffee, handcrafted by our talented baristas,” said Niccol.

STARBUCKS CEO SAYS COMPANY WILL FIX ‘OVERLY COMPLEX MENU’ TO REVERSE SALES DECLINE

Starbucks CEO Brian Niccol emphasized that the company must return to its roots as a coffeehouse. (Photo: Robin Marchant/Getty Images/Getty Images)

Changes to expect at Starbucks:

coffeehouse transformation

Niccol said the company plans to return the cafes to their old “coffeehouse” aesthetic with “personal touches” including serving coffee in ceramic mugs to diners.

The company is also reviewing its cafe design and plans to introduce more comfortable seating and amenities so customers are more likely to sit and work.

milk substitutes

The company said this will stop extra charging For customizing non-dairy milk-containing beverages. Customers who replace dairy milk with soy milk, oat milk or coconut milk at company-operated stores will see a price reduction of more than 10% starting Nov. 7, the company said.

Starbucks’ milk selection (Business Wire/Starbucks)

condiment bar

The spice bar is making a comeback next year. Niccol told analysts that baristas have been requesting the feature and say it will speed up their service.

“If you order a brewed cup of coffee, it’s a really fast experience because we’ll give it to you right at the point of sale, and then you can go to the coffee flavor bar and change how you brew your coffee,” Niccol told analysts.

Sharpies are back

Niccol said the company has reintroduced Sharpies, a nostalgic nod to the old days when baristas would write customers’ names on coffee cups.

“I think there are a lot of simple things that go way beyond saying, ‘you know what, this is a community place, this is a special place where people are here to connect,’” Niccol said.

Part of its immediate strategy includes simplifying the coffee chain “overly complex menu” and fixing the pricing architecture.

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A barista pours iced coffee in the mobile pickup area of ​​a Starbucks location on Aug. 17, 2023, in New York City. (Gabby Jones/Bloomberg via Getty Images / Getty Images)

CFRA Research equity analyst Alex Fasciano believes that already announced changes such as the simplified menu and new pricing architecture will improve the customer experience, but warned that there could be headwinds regarding pricing in the short term:

Fascino told FOX Business that in-store design changes, particularly improved coffee flavor bars and more comfortable furniture, “will likely require significant investments” in fiscal 2025.

Fasciano said it’s not yet clear what additional plans the administration will have, although he doesn’t foresee the changes having a “major impact.”

“From one perspective, the U.S. market is competitive and management wants to run each store efficiently,” he said. “On the other hand, they want to improve the customer experience, possibly sacrificing margins.”

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Fasciano added that if Niccol manages to create a better customer experience, “there’s an argument that it will make a big impact on sales and margins. But we think it will take some time for that to come to fruition.”

In a research note published Thursday, Morgan Stanley analyst Brian Harbor was optimistic about the changes, saying it’s “very similar to the Starbucks we first started going to a few decades ago and remember fondly.”

Part of CEO Brian Niccol’s immediate strategy is to simplify the “overly complex menu” and fix the pricing architecture. (Starbucks)

Harbor believes Niccol’s vision is achievable but believes there is “a lot to work on in a massive store system.”

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“We were reminded of the old metaphor of ‘building an airplane while flying,'” Harbor wrote. “Right now we’re kind of in a waiting period as outside observers, and we’re still optimistic about the opportunity.”

He predicted that key performance indicators would show “challenges and some pain” in the near term.