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Good morning. Starbucks is heating up. Earlier this week, the coffee shop company reported its first US quarterly comparable sales increase in two years, helped by CEO Brian Niccol’s focus on efficient operations, consistency of service, more attractive stores and a streamlined menu that still manages to introduce new items often enough to keep people interested.
“The shine is back,” Niccol shouted Thursday in Manhattan during his first Starbucks investor day. Although he admits it’s too early to shout victory, he deserves credit for getting this challenging transformation off the ground. He does this by offering the troops, from your local barista to his C-suite, something whose absence has undermined other CEOs’ comeback attempts: clarity of mission and simplicity.
That discipline extends to Starbucks’ $8 billion international business. Starbucks International CEO Brady Brewer told me that most of the 20,000 or so new stores it wants to add overseas in the coming years will be in markets where it already exists and is growing, rather than new ones.
Niccol calls his transformation “Back to Starbucks.” That means going back to what made Starbucks famous in the first place. People want to sit down and enjoy their coffee? Let’s rule out seatless Starbucks locations that exist only for mobile order pickup. (The company added 25,000 seats to company-operated US stores.)
What about store design? When it comes to creating new store layouts, Starbucks is now designing with store workers and not just for them. Starbucks is currently testing new ideas in five stores in real operating conditions. (We’ve all been in a chaotic Starbucks watching employees bump into each other because HQ gave them an unusable layout.)
Another example: under Niccol, each store is graded on the five most important criteria, a fraction of the metrics used before: customer experience, performance during peak hours, employee scheduling, product availability, and health and safety.
Niccol has a reputation for succinctly stating what needs to be done, simplifying processes and explaining what happens next after each change step. It’s a playbook familiar to those who have seen it how he fixed Chipotle Mexican Grill following food safety hazards. He is methodical about how to repair the damage and regain the trust of customers and workers before it goes wrong. When he was done, Chipotle sales doubled.
Too many change attempts that see a CEO throw spaghetti at the wall in the hope that something will work, further confuse the rank and file and erode their trust in management. If you look at the recent transformation of Starbucks and the return to form of brands like Ralph Lauren and Bloomingdale’s, you can see a common thread: The CEO provides clear direction, provides frequent updates and “proof” that the plan is working, and is constantly looking ahead to the next step.
“Back to Starbucks reconnects us to our core. It gives us a platform to build the best of Starbucks with clarity, confidence and purpose,” said Niccol. So far, his method is working.
Contact CEO Daily by Diane Brady at [email protected]
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The emergence of ‘new collar’ jobs
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The markets
S&P 500 futures down 1.03% this morning. The last session closed at 0.13%. STOXX Europe 600 rose 0.37% in early trading. The UK FTSE 100 rose 0.11% in early trading. in Japan Nikkei 225 fell to 0.09%. in China CSI 300 fell by 1.0%. South Korea KOSPI increased by 0.06%. in India NIFTY 50 fell to 0.39%. Bitcoin available at $82K.
Around the watercooler
Take out Tesla’s irreversible profit, and the stock has never been more expensive—now boasting a ‘core’ PE of 632 said Shawn Tully
$38 trillion national debt finds Democratic, Republican supermajority as watchdog sees ‘a major problem for America’s economic future’ by Nick Lichtenberg
Lead engineers at Anthropic, OpenAI say AI is now writing 100% of their code—which has huge implications for the future of software development jobs by Beatrice Nolan
Microsoft’s $440 billion liquidation, and investors upset about OpenAI’s debt, explained by Eva Roytburg
CEO Daily is compiled and edited by Joey Abrams, Claire Zillman and Lee Clifford.
