New Starbucks CEO Brian Niccol wants to fix confusing menu, long waits for coffee

By Tomi Kilgore

On his second day in charge, Niccol writes in an open letter that he wants to 'get back to what makes Starbucks, Starbucks'

On his second day in charge, Starbucks Corp.'s new chief executive, Brian Niccol, wrote a letter to customers, employees and shareholders saying his focus in his first 100 days will be "getting back to Starbucks."

After speaking with customers, Niccol said there's a sense that the company has "drifted" from its core, in which its stores were a place to not only get a coffee, but also a gathering space and community center.

"Many of our customers still experience this magic every day, but in some places - especially in the U.S. - we aren't always delivering," Niccol wrote. "It can feel transactional, menus can feel overwhelming, product is inconsistent, the wait too long or the handoff too hectic."

Starbucks' stock (SBUX) rose 0.5% in afternoon trading, reversing an earlier intraday loss of as much as 1.2%.

To help fix the problem, Niccol said the company will make investments in technology to improve its customer experience, supply chain and the Starbucks app and mobile-ordering platform.

He also listed the four areas to fix first that he believes will make the biggest impact:

Make sure baristas have the tools and the time to consistently make drinks, and to deliver them personally to each customer. Also boost the employee experience to make Starbucks "the best place to work" and to provide growth opportunities."Get the morning right, every morning." Basically, deliver drinks and food on time, every time.Improve the in-store experience. "Our stores will be inviting places to linger, with comfortable seating, thoughtful design and a clear distinction between 'to-go' and 'for-here' service."Marketing to tell the company's story and remind customers what makes Starbucks, Starbucks. "We won't let others define who we are."

This is what investors were looking for from Niccol: to fix the problems that had led to a falling stock price and three straight quarters where the company failed to beat profit, revenue and same-store sales expectations.

Through Aug. 12, the stock had tumbled 19.8% on the year, while the S&P 500 index SPX had rallied 12%.

When Starbucks announced on Aug. 13 that Niccol - who was CEO of Chipotle Mexican Grill Inc. (CMG) - would start as its new CEO on Sept. 9, investors cheered by sending the stock to a record one-day gain of 24.5%.

Starbucks' stock has now slipped 3.5% on the year, while Chipotle shares have rallied 18.8% and the S&P 500 has advanced 15%.

-Tomi Kilgore

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09-10-24 1447ET

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