7 Ways Starbucks CEO Brian Niccol Wants to Change the Coffee Chain

Starbucks CEO Brian Niccol shared more details about the company's turnaround strategy during the company's quarterly conference call on Wednesday.

Starbucks has reported declining sales for three quarters in a row. But the coffee chain is hoping some simple changes to its U.S. business will pay off and help reverse the trend as it rolls out a more ambitious and comprehensive plan.

Many of the coming changes are designed to help Starbucks achieve a smaller goal: delivering a customized drink to customers in under four minutes. According to Niccol, about half of current transactions fall within this threshold.

As Starbucks focuses on its turnaround, the company is also planning fewer new locations and renovations in fiscal 2025 to free up capital, CFO Rachel Ruggeri told investors on the conference call.

Shares of Starbucks were flat in trading on Thursday after the company said its sales fell for the third straight quarter.

Here's how Niccol plans to boost Starbucks' sales:

Starbucks customers have become accustomed to walking into a coffee shop and seeing a counter full of mobile orders. Niccol wants to change that.

“When it works well, it's great, but sometimes it can be challenging for both customers and partners,” he told investors on the company's conference call.

Mobile orders account for more than 30% of Starbucks' U.S. transactions.

Niccol said Starbucks is working to improve the accuracy of the app's timing so customers know when their drinks are ready. He also wants to better separate mobile order pickup from in-person ordering at restaurants and limit customers' ability to customize their drinks.

“Right now I think there are some customizations specifically in how the mobile ordering app runs that are just very extensive and unnecessary,” Niccol told CNBC. “So I just think we need to put better guardrails in place so that we can give you access to customizations that fit the drink you're ordering, and then also allow our baristas to be more consistent in their execution.”

The Starbucks menu is being redesigned.

Niccol said the coffee chain needed to focus on “fewer but better” offerings. By reducing the menu, it becomes easier for baristas to prepare each drink consistently. It should also improve speed of service, with fewer drink recipes to remember.

“There's always a long list on the menu, and we honestly don't do those things very well,” Niccol said, adding that baristas often take longer to prepare unfamiliar drinks.

Niccol said Starbucks will also look at the items it wouldn't have put on the menu if the four-minute standard had already been in effect.

While the changes may disappoint some customers, Niccol believes they will appreciate faster, more consistent service in the long run.

As part of Niccol's “Back to Starbucks” plan, he wants the company's locations to feel like “third places” where customers can work and socialize outside of their homes and offices.

The coffee chain's positioning as a “third place” helped it grow into a global giant, but eventually it lost that reputation. Niccol said he wanted to reintroduce a more personal touch, such as serving coffee in ceramic mugs for customers who like to linger in cafes. Sharpies will also make their triumphant return after being replaced by printed labels.

Starbucks is also reviewing the design of its stores, with a focus on returning to more comfortable seating and amenities.

“The reality is that I think most of our cafes don't have the right seating, maybe not the right structure, not the right layers, not the right warmth. “We have to bring something back,” Niccol said.

In recent years, the company has opened more pickup-only locations, particularly in urban areas, with little to no seating. Niccol said even these cafes could be more welcoming to customers.

“I think there are design elements that can still push this idea of ​​a community coffeehouse, even in some of the finishes we've done, that just don't lend themselves to conveying the full, traditional coffeehouse experience,” he told CNBC.

In the early days of the Covid pandemic, Starbucks relegated its condiment bars behind the counter. Since then, if customers want to add milk or sugar to their drinks – even a simple filter coffee – they have to ask the barista directly.

But that will soon change. Niccol said the spice bars are making a comeback, giving baristas more time and easing headaches for some customers.

Starbucks has already increased the average number of hours baristas put in. More shifts – and more consistent scheduling – have reduced the company's turnover and improved overall retention.

But Niccol also wants to ensure cafes are appropriately staffed, from the busy morning rush to pre- and off-peak “shoulder hours.”

Since his first week on the job in early September, Niccol has said he wants to revamp the company's marketing. On Wednesday's call, he said he wanted to use the marketing to appeal to a broader audience than Starbucks Rewards members and highlight the quality of Starbucks coffee.

Customers can also expect fewer offers as a result of the marketing shift. Niccol said discount-focused offers were “ineffective” and could overwhelm baristas.

Niccol has a marketing background and started his career at Procter & Gamble. Then he moved Delicious brands and worked in various marketing positions before taking the helm of Taco Bell. This marketing know-how was helpful when he got started Chipotle and will likely prove valuable at Starbucks as well. He has already tapped a Chipotle alum, Tressie Lieberman, as Starbucks' new chief global brand officer.

After years of customer pleas, Starbucks will finally lower the premium on its milk substitutes starting November 7th. The change means some customers could save more than 10% on the cost of their drinks, according to the company.

More broadly, Starbucks doesn't plan to change North American prices in the next fiscal year, which ends around early October, in hopes of improving consumer perceptions of prices.

Executives cited resistance to higher prices as one reason casual customers are no longer visiting the locations as often.