Starbucks tries turnaround after U.S. sales fall 6%: NPR

You know when Starbucks drops bad news early, as it did last week to miss Wednesday’s deadline to report earnings.

Sales in the U.S. have slumped for months. Down 6% in the most recent quarter Compared to a year ago, it was the worst quarter since the pandemic-era shutdowns. The number of purchases decreased by 10%.

The chain’s new CEO is now ordering a turnaround: a plan he calls “Back to Starbucks” that evokes a time when Starbucks was simple, cheap, convenient, cool — and prosperous.

“We had to fundamentally change our recent strategy,” says CEO Brian Nicol A video address Joined the job for two months. He noted plans to “simplify our very complex menu,” adding: “We need to reposition ourselves as a community coffeehouse.”

In the absence of further details, speculation is rife online: Will cafes get plush beds? Will Starbucks denigrate syrups, toppings and endlessly customizable drinks as “Frankendrinks”? Will it reopen its condiment bar, where people poured their own milk and sweets before the pandemic?

A company representative tells NPR that the CEO’s plans are still being shaped. Some details may emerge on Wednesday as Nicole takes questions from investors for the first time.

Too fancy is basic, too basic to be fancy

At a new Starbucks in the Washington suburb of Bethesda, two women chat with paper coffee cups at an airy table. Closer inspection revealed cups from another cafe a block away.

“We’re here for the sun,” says one of the women, Tamar King. “It’s a park.”

In fact, this Starbucks is swarming with competitors: This busy downtown stretch counts 11 coffee spots within a two-block radius. That includes the usual suspects Dunkin’ and Panera, trendy options Tatte Bakery and Ceremony Coffee Roasters, and another Starbucks. This type of competition did not use to threaten the coffee company, but it has grown in intensity.

In a video address, new Starbucks CEO Brian Nichol says the chain’s strategy “needs to fundamentally change.”

NPR screenshot/Starbucks CEO video address

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NPR screenshot/Starbucks CEO video address

In addition, there is another front. The company that got America hooked on coffee is now competing not only against other cafes, but against all fancy coffee makers at home or at work.

That means Starbucks is caught in the middle: too fancy to be basic, too basic to be fancy.

“I was gone [to Starbucks] Every day for years,” King says. What changed? “The office I work in has a great coffee machine. Great.”

Nicole talks about Starbucks losing customers from time to time. But the once-loyal audience is also in line.

“We’ve loved it for years,” says Lisa Janofsky, who came with her husband, Jerry, to get cash on her rewards card at a Bethesda Starbucks: a free Wendy’s Skim Latte for her birthday.

They used to go to Starbucks every day. But now they gravitate to gourmet coffee shops when they want a “sense of community” and great coffee taste. Daily lattes are made in-house and they estimate a cup is about $1.

“We have a good machine at home that we use,” says Jerry Janofsky. “My wife is a great barista and she makes designs for me.”

On the wish list: great beans, cheap drinks, late art

Lisa Janofsky says she would visit more often if Starbucks beans tasted less burnt, a short latte with a shot of espresso and baristas made latte art among the size options.

The prospect of baristas creating designs on top of milk foam is hard to imagine at the pace of Starbucks, especially during the morning rush. Mobile orders often pile up, stores are overcrowded, and workers are overwhelmed.

“We need to address staffing in our stores, remove bottlenecks and make things easier for our baristas,” says new CEO Nicole. “We need to refine mobile ordering and payment so it doesn’t overwhelm the cafe experience.”

Starbucks is betting big on Nicole. The coffee company lured him away from Chipotle, which he is credited with restarting A series of food borne diseases. In the coffee company, he can earn One of the biggest paychecks In the industry — more than $100 million — if he succeeds in turning it around.

His challenges are many.

Many shoppers in Bethesda expressed their disappointment that it was Starbucks Still fighting Its union shops. The chain has established a foothold in China. It is Facing boycotts In the Middle East and Asia, Israel is seen as having the company’s support in its conflict with Gaza. A woman in Maryland says that’s why two dozen people she knows in America have stopped going to Starbucks.

And the biggest complaint by far?

“It’s too expensive,” says Angeli Smith, a regular at Starbucks cafes, visiting a friend for a pumpkin cream cold brew on this day. “I mostly only use my gift cards for birthdays and graduations.”

Nicoll will be asked about his pricing plans when he speaks to investors on Wednesday. He’s only spoken in vague terms so far, promising to “adjust our pricing structure and make sure every customer feels valued every time they visit Starbucks.”