Additional Coverage:
- Starbucks CEO Brian Niccol says price changes are a last resort in coffee chain turnaround (businessinsider.com)
Starbucks CEO Hints at Future Price Hikes Amid Revitalization Efforts
Starbucks’ Q3 earnings report revealed a sixth consecutive quarter of declining sales, prompting CEO Brian Niccol to acknowledge the possibility of future price increases, though he stressed it would be a last resort.
Niccol, known for successful turnarounds at Taco Bell and Chipotle, expressed confidence in his “Back to Starbucks” campaign, stating it’s ahead of schedule. While emphasizing his preference to avoid price hikes, he admitted they remain a potential tool.
“Pricing will be a part of our business model,” he explained during the earnings call. “There are times where it makes sense…and when those situations present themselves, we’re going to do it in the least amount of pricing necessary.”
The company has already adjusted pricing under Niccol’s leadership, eliminating extra charges for non-dairy milk and restructuring pricing for add-ins. However, the specifics of any future price changes remain unclear. A Starbucks spokesperson declined to comment.
The Q3 report showed a 2% decline in global comparable store sales, primarily due to a decrease in transactions. This drop was partially offset by a 1% increase in the average ticket price.
While revenue exceeded expectations at $9.5 billion, earnings per share fell short of projections. Despite this, Starbucks stock saw a post-earnings bump in after-hours trading.
Niccol remains optimistic. “While our financial results don’t yet reflect all the progress we’ve made, the signs are clear — we’re gaining momentum,” he stated. The company is focusing on improved customer service through its “Green Apron Service” model, currently being rolled out nationwide after successful pilot programs.
The “Back to Starbucks” campaign, launched last September, aims to address declining sales and customer experience concerns. In addition to operational changes, the company has also implemented a stricter return-to-office policy for support staff.