Latest news with #BacktoStarbucks
Yahoo
a day ago
- Business
- Yahoo
Starbucks pledges $500M in additional labor as sales slide continues
This story was originally published on Restaurant Dive. To receive daily news and insights, subscribe to our free daily Restaurant Dive newsletter. Starbucks same-store sales decreased by 2% in the U.S. during the brand's fiscal Q3, according to an earnings release, marking the sixth consecutive quarter of declining same-store sales. CEO Brian Niccol said on the chain's earnings call that he sees the quarter's results as evidence that the Back to Starbucks turnaround plan is working and claimed that Starbucks is ahead of its internal expectations. To speed up Starbucks' turnaround process, Niccol said, the chain will accelerate the deployment of a new operations model — Green Apron Service — across its system next month. The Green Apron protocols emphasize what Cathy Smith, the brand's CFO, called 'repeatable, consistent and scalable standards,' and five key moments of connection with customers. Smith said this deployment will be part of an additional $500 million in labor allocation across the next year. The coffee giant will also deploy new managerial analytics, dubbed the Grow Report, in fiscal Q1 2026, which give store-level managers more insight into key drivers of same-store sales growth, according to the earnings call, Niccol said. 'It will provide sharper insights to improve our outlier performance and incentivize retail leaders,' Niccol told analysts. Refreshes and new prototypes are coming Starbucks is also slowing down new construction and major renovations to rollout a package of store-level changes that cost $150,000 per location. 'Uplifts are intended to quickly replace thousands of seats we removed and introduce greater texture, warmth and layer design,' Niccol said. The brand anticipates completing at least 1,000 such design changes by the end of calendar year 2026, which would amount to a roughly $150 million investment and cover about 9% of the brand's 11,453 company-operated North American stores. Starbucks has also developed a new prototype for standalone units 'that has 32 seats, a drive-thru and a roughly 30% lower cost to build,' Niccol said. This prototype will start opening in fiscal year 2026. It also has a small format version with 10 seats under construction in New York City that will open in a few months, he added. 'We believe this new prototype will deliver an exceptional customer experience, improve unit economics and unlock growth opportunities in more markets,' he said. 'We plan to complete an evaluation of our North American portfolio by the end of this fiscal year to ensure we have the right coffeehouses in the right locations to drive profitability and deliver the Starbucks Experience.' Changes yield early positive signs The coffee chain has made a large number of changes in recent months: asking corporate employees to return to in-office, making some new menu items official, and increasing managerial presence on the shopfloor, as it builds on initial changes to brand positioning, store experience and strategic priorities made in Niccol's first six months as CEO. Niccol said the chain is seeing positive indicators from these changes in operational metrics, with yearly barista turnover at less than 50%, and shift completion rates at 98%. Non-rewards members saw year-over-year transaction growth for the first time since before the COVID-19 pandemic, Niccol said. International markets were a bright spot for the chain, with flat comps overall and 2% same-store sales growth in China. Given the scale of investment in labor hours and renovations, Starbucks is looking to alter its cost structure and find ways to offset these changes, Niccol said. The brand has also shifted its executive compensation to incentivize cost-cutting. Earlier this year, the chain laid off about 1,100 corporate employees, or about 7% of its non-cafe workforce. However, specifics on changes to the company's cost structure may have to wait for next year's investor day, Niccol said in response to investor questions. Combined with Chipotle's same-store sales decrease, Starbucks' decline — driven by a 4% decrease in transactions — is a worrying signal for the overall restaurant industry, indicating a difficult quarter for many chains. Clarification: This story was updated to provide more precise details about the Green Apron Service. Recommended Reading Starbucks standardizes pricing for flavor customizations Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Globe and Mail
2 days ago
- Business
- Globe and Mail
Starbucks Still Needs More Time
Key Points Starbucks posted better revenue than investors had expected, but weakness in comparable sales and an earnings shortfall pointed to ongoing challenges for the coffee giant. CEO Brian Niccol said that he believes the Starbucks turnaround is actually ahead of schedule. Shareholders seem optimistic, but even Niccol warns that investors will likely have to wait until 2026 before seeing dramatic signs of success. These 10 stocks could mint the next wave of millionaires › Here's our initial take on Starbucks ' (NASDAQ: SBUX) fiscal third-quarter financial report. Key Metrics Starbucks Sees Its Turnaround Start to Take Shape Expectations have been high that Starbucks will eventually be able to recover from an extended period of weakness and return to its former glory. Yet although those hopes are still there, shareholders will have to stay patient in order to see a true recovery in key business metrics. Starbucks' fiscal third-quarter financial report showed mixed results. Revenue climbed 4% globally, including a 2% rise in North America and a 9% boost in the coffee company's international segment. However, comparable sales were down 2% globally, with a 2% drop in North America offsetting flat comps internationally. Earnings were down by nearly half, as the company cited inflation, labor costs, and the expenses associated with the Back to Starbucks initiative. CEO Brian Niccol urged investors to remain confident. Based on his prior experience in dealing with companies that are turning themselves around, Niccol believes that Starbucks is "ahead of schedule" after having "fixed a lot and done the hard work on the hard things" to get started. Niccol told shareholders to expect a "wave of innovation" next year that should accelerate growth, bring back top customer service, and make the Starbucks experience something to celebrate again. Immediate Market Reaction For their part, Starbucks investors seemed willing to accept Niccol at his word. The stock was up 5% in after-hours trading late Tuesday following the coffee company's quarterly release. Even though Starbucks' earnings miss could potentially have caused problems in investor sentiment, it appears that the company's CEO was successful in buying some extra time for Starbucks to make further progress in its turnaround efforts. What to Watch China was a bit of a bright spot again for Starbucks, with comps climbing 2% year over year. That reversed a serious tailspin for the coffee giant in the East Asian nation in last year's period, and over the past 12 months, Starbucks has opened more than 500 new locations in China. With Niccol essentially asking for leeway until next year before being fully accountable for the success of his turnaround efforts, Starbucks shareholders might not get the answers they want as soon as they want them. For now, investors seem willing to be patient. How long that will last, though, is anyone's guess. Helpful Resources Don't miss this second chance at a potentially lucrative opportunity Ever feel like you missed the boat in buying the most successful stocks? Then you'll want to hear this. On rare occasions, our expert team of analysts issues a 'Double Down' stock recommendation for companies that they think are about to pop. If you're worried you've already missed your chance to invest, now is the best time to buy before it's too late. And the numbers speak for themselves: Right now, we're issuing 'Double Down' alerts for three incredible companies, available when you join Stock Advisor, and there may not be another chance like this anytime soon. See the 3 stocks » *Stock Advisor returns as of July 29, 2025
Globe and Mail
10-07-2025
- Business
- Globe and Mail
Starbucks Ramps Up Test-and-Scale Strategy: Can It Fuel a Turnaround?
Starbucks Corporation SBUX is executing its turnaround strategy with a methodical 'test-and-scale' approach, prioritizing disciplined experimentation over sweeping changes. Under the umbrella of its 'Back to Starbucks' plan, the company is systematically piloting operational and experiential improvements across a select number of stores, scaling those initiatives that deliver measurable improvements in customer experience, efficiency and transaction flow. A key initiative is the green apron service model, designed to enhance speed and partner connection during peak hours. Initially tested in just a handful of stores, the model has since expanded to nearly 2,000 company-operated locations and is reporting promising results. Starbucks has initiated tests of a new order sequencing algorithm designed to improve service efficiency across both café and drive-thru channels without disrupting the mobile order experience. Early results from pilot stores indicate that average café wait times declined by approximately two minutes, with 75% of peak-hour orders now fulfilled in under four minutes. This iterative process extends beyond store operations. From menu simplification to beverage innovation and even store design enhancements, Starbucks is carefully calibrating each move. The company paused the broader rollout of its capital-intensive Siren equipment after finding that labor-focused adjustments yielded stronger returns. Likewise, changes to the Starbucks Rewards program and product mix — such as the sugar-free matcha update — are being introduced in phased rollouts to gauge impact before broader deployment. By relying on a structured framework of test, learn, refine and scale, Starbucks aims to minimize execution risk and align operational upgrades with both partner capability and customer demand. The company is optimistic and anticipates the initiative to drive profitable transactions and stronger long-term unit economics. How It Stacks Up to Other Industry Players Dutch Bros Inc. BROS is pursuing a similarly iterative strategy, particularly around throughput and digital ordering. Dutch Bros' Order Ahead program has shown promising traction in new markets, often delivering 2x the transaction penetration rate versus the system average. Dutch Bros is also scaling a limited food pilot, expanding from 8 to 32 stores, with broader rollout plans targeted for 2026. Its approach mirrors Starbucks in balancing operational simplicity with customer-centric innovation. Chipotle Mexican Grill, Inc. CMG continues to take a hybrid approach, leveraging both operational pilots and equipment-driven innovation to enhance throughput and guest experience. In 2025, Chipotle is rolling out produce slicers, dual-sided planchas and rice cookers following promising test results. The company is also investing in Autocado, its proprietary avocado prep tool, which has returned to test kitchens for refinement. CMG's strategy mirrors Starbucks in its use of controlled testing and phased scale but places greater emphasis on kitchen automation as a driver of labor efficiency and culinary consistency. SBUX's Price Performance, Valuation & Estimates Shares of Starbucks have gained 11.5% in the past three months compared with the industry 's rise of 4.6%. SBUX Three-Month Price Performance From a valuation standpoint, Starbucks trades at a forward price-to-sales ratio of 2.80, below the industry's average of 4.07X. The Zacks Consensus Estimate for SBUX's fiscal 2025 earnings per share (EPS) implies a decline of 25.1% year over year, while 2026 EPS indicates a rise of 20.5% year over year. The EPS estimates for fiscal 2025 and 2026 have declined in the past 30 days. Starbucks stock currently carries a Zacks Rank #4 (Sell). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Higher. Faster. Sooner. Buy These Stocks Now A small number of stocks are primed for a breakout, and you have a chance to get in before they take off. At any given time, there are only 220 Zacks Rank #1 Strong Buys. On average, this list more than doubles the S&P 500. We've combed through the latest Strong Buys and selected 7 compelling companies likely to jump sooner and climb higher than any other stock you could buy this month. You'll learn everything you need to know about these exciting trades in our brand-new Special Report, 7 Best Stocks for the Next 30 Days. Download the report free now >> Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Starbucks Corporation (SBUX): Free Stock Analysis Report Chipotle Mexican Grill, Inc. (CMG): Free Stock Analysis Report Dutch Bros Inc. (BROS): Free Stock Analysis Report
Yahoo
08-07-2025
- Business
- Yahoo
Starbucks incentivizes cost-cutting goal with exec bonuses
This story was originally published on Restaurant Dive. To receive daily news and insights, subscribe to our free daily Restaurant Dive newsletter. Starbucks is offering performance-based compensation awards for executives tied to the Back to Starbucks plans, according to a filing with the Securities and Exchange Commission on June 29. The awards, which have a target value of $6 million, consist of a grant of performance-based restricted stock units that vest after fiscal year 2027. Executives will receive the stock grants if the company meets cost-reduction goals, and leaders can earn twice the money if Starbucks hits additional goals related to '(i) the rollout of the Company's Green Apron Service program, (ii) coffeehouse uplifts, (iii) new food and beverage platforms, and (iv) a reimagined Starbucks Rewards program,' according to the 8-K. The stock awards show that among Starbucks' key goals for the next two years, reducing costs is its highest priority. The additional goals are part of CEO Brian Niccol's effort to renovate the brand and return its focus to the shopfloor. The Green Apron Service model, for instance, 'combines and unifies new service standards and expectations, changes to partner plays and deployment, streamlined routines, and our order sequencing algorithm,' Niccol said on the brand's fiscal Q2 2025 earnings call. Starbucks is in the middle of a transition toward an on-premise, coffeehouse focus. The early steps of that plan included the return of ceramic mugs for in-store orders, the restoration of the condiment coffee bar, improved seating, and handwritten notes on cups, according to the earnings call. But going forward, Starbucks will renovate large numbers of cafes to meet new, warmer design standards. Niccol said on the earnings call that the chain was balancing the need for renovations with cost: 'uplifts feel premium, but keep renovation costs down and minimize closure days.' Starbucks also has cut a large number of menu items, but the new incentives signal the brand has a long-range strategy to use new menu items to draw in consumers. This menu strategy is likely to include coffee-forward beverages, in keeping with Niccol's narrowed idea of the brand's identity. The relatively new ristretto beverage platform is a good example of what a coffeehouse-focused menu innovation move might look like. The changes to the rewards program, meanwhile, likely mean a shift away from aggressive discounting, given Niccol's comments on the most recent earnings call. Starbucks, he said, had been discounting too much through its rewards program and was trying to build up transactions through the program that are not based on discounting. Starbucks Workers United, which represents baristas at about 500 stores, said the bonuses reflected misaligned priorities. Jasmine Leli, a unionized barista and bargaining delegate, said in a statement emailed to Restaurant Dive that the bonuses were 'a ridiculous and irresponsible step for Starbucks at a moment when 'Back to Starbucks' isn't working' and that the company would be better served by investing that money in hourly workers. Starbucks did not immediately respond to a request for comment on SBWU's statement. Recommended Reading Starbucks standardizes pricing for flavor customizations Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
10-06-2025
- Business
- Yahoo
Starbucks accelerates new staffing model to all North American stores
By Waylon Cunningham (Reuters) -Starbucks CEO Brian Niccol told Reuters on Tuesday that he would accelerate the rollout of the coffeehouse chain's new staffing and service model, aiming for all 18,000 North American stores by summer's end, rather than the initial plan for just a third of U.S. stores by year-end. Niccol says the model is a foundational element of his turnaround strategy for the company, as he bets on an improved in-store customer experience to reclaim the sales growth that has eluded Starbucks in recent quarters. Niccol said early tests of the model have sped up service times and grown sales, without providing specifics. 'We've learned, and now we know what we need to do, so let's scale it,' he told Reuters at the company's three-day leadership summit in Las Vegas on Tuesday. The Green Apron model includes in-store technology to more efficiently sequence orders, as well as a dedicated barista for drive-through orders. Starbucks rolled out the service changes to 700 stores initially. During the company's April 29 quarterly earnings call, Niccol said it would be introduced in a third of U.S. stores by year-end. Niccol took over as Starbucks CEO in September with a plan to return the chain to its coffeehouse roots, focusing on the in-store experience and away from a reliance on mobile and to-go orders, in what the company calls "Back to Starbucks.' The goal is to get baristas to get customers their orders in four minutes or less. He did not share any financial figures about the cost of the Green Apron model's deployment, but said the company would host an investor day in 2026. The Las Vegas summit, the company's first since 2019, is hosting more than 14,000 managers and other company leaders. Analysts and investors have wondered how long Niccol will need to turn the company around. Shares have gained 11% over the last five years, compared with an 88% rise in the broad-market S&P 500. TD Cowen recently downgraded its rating of Starbucks to "hold" from "buy", saying in part that it believed Niccol's turnaround would take longer than expected to deliver results. Niccol said the transition will take time. Starbucks has not issued annual guidance, and Niccol told investors in an earnings call earlier this year that earnings-per-share 'shouldn't be used as a measure of our success' at this stage, instead pointing to in-store metrics like average wait times for orders. He said the transition's effect on earnings would be temporary. On Tuesday, he emphasized his goal isn't to achieve short-term performance solely through cost reduction. As Starbucks increases investments in its labor and elsewhere, Niccol said he would be "ruthless" in cutting expenses not related to the company's turnaround. 'We have to be critical of where we're spending if it's not driving toward the Back to Starbucks strategy and growth programs.'
