Starbucks, the world's largest coffee chain, has launched high-intensity restructuring to overcome sluggish results, but is facing pushback from baristas over a "paradoxical" directive to finish complex-to-make drinks in a few minutes. It is also struggling to bring customers back due to high prices and has yet to show clear progress in recovering performance.
On the 9th (local time), the New York Times (NYT) reported, "Brian Niccol, the Starbucks chief executive officer (CEO) who moved from Chipotle with a $100 million compensation package, has moved at a pace as fast as caffeine over the past year to restore Starbucks' vigor," adding, "Some of Niccol's moves have been welcomed, but others have brought confusion and frustration to customers and employees."
Niccol, hired at Starbucks in Aug. last year with the mandate to improve results, revised several policies to draw customers back. He made alternative milks free options in drinks that contain milk and brought back the once-discontinued self-serve bar to offer milk and syrups again. He also launched an extensive remodel to increase comfortable seating and streamlined the menu by trimming various drink and food items. Instead, he rolled out promotional drinks that fit the latest trends.
Believing that long waits during peak hours were a major cause of customer churn, Niccol told baristas to serve drinks in a short time, like at fast-food restaurants. In an interview with Fox News last month, he said he would cut customer wait times to within 4 minutes. To that end, Starbucks hired more staff and invested more than $500 million in developing order-sequencing optimization technology.
The problem is that the promotional drinks Starbucks has introduced are complex to make, making it hard to finish them within 4 minutes. Brooke Allen, a Starbucks barista in California, said that to make one of this summer's popular items, the "Strawberry Matcha Strato Frappuccino," you need six ingredients and two blenders. "If that were the only drink I had to make, it could be done in 40 to 50 seconds, but that's not reality," Allen complained.
Baristas also voice frustration at being forced to provide services they had done voluntarily, such as drawing on cups or writing messages. According to the NYT, baristas receive "disciplinary" warnings if they do not write a personal message on every cup even during rush hours. Jasmine Relly, a Starbucks barista in Buffalo, said, "If you say you don't have time to write on cups, you get, 'Do you not want to keep working?' as a response."
The NYT said, "The biggest obstacle for CEO Niccol and his vision to 'return Starbucks to its coffeehouse roots' will likely come from inside, namely the baristas on the front lines," adding, "Baristas feel Starbucks' new dress code is overly strict and does not fit the cozy neighborhood shop vibe."
From the customer's standpoint, drink prices that have become excessively expensive are a major barrier to entry. Starbucks has steadily raised prices to cover increased expense as coffee bean prices surged due to droughts in major coffee-growing regions and as the Donald Trump U.S. administration imposed a 50% tariff on Brazilian coffee. Diana Hoff, a Starbucks customer in North Carolina, said the price of the drink she usually orders rose from $6.71 to $7.25, adding, "For the first time in my life, I thought, 'Ah, this is ridiculous. I can't spend more than $7 on coffee.'"
What's more, more coffee shops are offering original drinks at low prices. Arkansas' "7 Brew Coffee" and Nebraska's "Scooter's Coffee" are representative examples. Also, a drive-thru coffee chain based in Oregon sells energy drinks with personalized options like Starbucks, and its share price doubled over the past year. Alternatives to Starbucks are multiplying.
Niccol's policies have so far failed to satisfy both employees and customers, and performance has yet to improve. In Jul., Starbucks said sales at global stores open at least one year fell for the sixth straight quarter. North American sales fell 2%, but that was better than the market expectation of minus 2.5%. However, while the restaurant and bar industry index rose 6.5% over the past year, Starbucks shares fell 8.8%.
Niccol and investors expect that although it will take some time, the restructuring will ultimately be effective. In a message to employees on the 8th, Niccol said that thanks to his normalization plan, the company's turnover rate had fallen to a record low and more employees were recommending Starbucks as a good place to work. "Employees say they like 'the changes happening now.' That's because customers are giving feedback that they are satisfied with the changes," he said, emphasizing, "We will continue in this direction."
Danilo Gargiulo, an analyst at Wall Street investment firm Bernstein, said, "It will take some time for consumers to see 'what the new Starbucks looks like,'" adding, "Investors expect store traffic to stabilize around next year and margins to improve in 2027."