Starbucks menu overhaul: CEO promises simplification to revive sales
Starbucks has continued to witness a decline in its sales for the third consecutive quarter, leading to a drop in its shares by over 3% during extended trading. The company's preliminary net sales dropped by 3% to $9.1 billion, falling short of analysts' expectations of $9.38 billion. This is the steepest drop since the COVID-19 pandemic began, with same-store sales witnessing a massive 7% drop.
Starbucks CEO announces new strategy amid sales slump
Amid the continuing sales slump, Starbucks CEO Brian Niccol has unveiled a new strategy - the 'Back to Starbucks's plan.' With this, the company hopes to reverse the slowing demand for Starbucks's drinks, especially in its biggest market, the US. Niccol said more details about this turnaround strategy will be revealed during the company's earnings call on October 30.
Starbucks to revamp marketing and simplify menu
As part of the new strategy, Niccol revealed that Starbucks is "fundamentally changing" its marketing approach to focus on all customers, not just those in its loyalty program. The company also plans to simplify its "overly complex menu," adjust pricing, and ensure drinks are directly handed to customers. These changes are being implemented in response to customer and barista feedback over recent years.
Starbucks suspends fiscal 2025 outlook amid sales decline
Starbucks has suspended its fiscal 2025 outlook amid the recent CEO transition and current business conditions. The company's same-store sales in North America, its home market, fell by 6% even as it made increased investments such as more frequent promotions on its mobile app and an expanded product range. In China, Starbucks's second-largest market, same-store sales fell sharply by 14% amid increased competition.
Starbucks increases dividend despite sales slump
Despite the sales decline, Starbucks has increased its dividend from 57 cents to 61 cents per share. CFO Rachel Ruggeri stated that this move is intended to "amplify our confidence in the business, and provide some certainty as we drive our turnaround." She also noted that while a plan is being developed to revive the business, crafting an effective strategy will take time.
