Baristas complain about what they say are chronic understaffing and poor pay and benefits, and their inability to easily ban aggressive customers from Starbucks stores.
Coffee chain needs to ‘fundamentally change’ strategy, new CEO Brian Niccol says
Starbucks on Tuesday reported weaker-than-expected sales in its fiscal fourth quarter, which ended Sept. 29.
Starbucks’ new CEO Brian Niccol has called for major changes to get the company back on track in some of its biggest markets, vowing to review its “overly complex menu,” staffing and store amenities.
Shares of the company were down about 5% in premarket trading.
The comments came as the struggling coffee giant suspended its guidance for its fiscal year 2025 and said same-store sales declined for the third quarter in a row, in a surprise announcement.
Niccol also pledged more support for baristas; many are complaining about “chronic understaffing and poor pay and benefits,” and a lack of recourse for aggressive customers, per Reuters.
In a video message released by the company, Niccol — a former Chipotle CEO who joined Starbucks last month — said Starbucks’ problems are “very fixable and that we have significant strengths to build on.”
“To succeed, we need to address staffing in our stores, remove bottlenecks, and simplify things for our baristas,” he said in a video statement.
Baristas Raise Concerns
Liv Ryan, a barista and union organizer at a Starbucks in Long Island, New York, said that Niccol should put “an end to short staffing.”
She said baristas have long had gripes about the lack of guidance from Starbucks on how to contend with bad-tempered customers.
“I have been told countless times that part of our job is ‘just taking rude customers,'” Ryan said. “But there’s no clear line between ‘rude’ and ‘hostile’ and even then I shouldn’t have to put up with anyone being rude to me at my job.” per Reuters.
Path Forward
While Niccol’s appointment has generated hope for change, there’s a long road ahead for the coffee giant. With the focus on simplifying operations and enhancing employee support, Starbucks leadership is betting that these changes will boost customer visits and restore momentum.
“We know how to make these improvements, and when we do, we know customers will visit more often,” Niccol said confidently.
“Starbucks Corp. shares declined after sales plunged for the third consecutive quarter and the company pulled its guidance for 2025, calling attention to the scope of the problems facing new Chief Executive Officer Brian Niccol
The coffee chain reported a 7% decline in same-store sales in the fourth quarter ended Sept. 29, according to a preliminary earnings release on Tuesday. The weakness was especially evident in the US, where transactions were down 10% from the prior year, and in China, where comparable sales fell 14%.
Starbucks said withdrawing guidance for the current fiscal year will give Niccol an opportunity to assess the business and solidify a turnaround plan. Since taking over the top post on Sept. 9, he’s been rearranging the leadership ranks and has unveiled the broad outline of a plan to stoke growth that includes making cafes more inviting and speeding up morning service.
Starbucks shares fell 2% at 9:34 a.m. in New York. The stock is now negative for the year, compared with a 22% gain in the S&P 500 Index.
The fourth-quarter sales decline was twice as steep as analysts had expected and the biggest quarterly drop in four years. Starbucks said that a push to launch more products and offer a plethora of promotions failed to bring more customers into its stores.”
-Bloomberg
