By Julie Creswell
Since taking over as CEO of Starbucks in the fall, Brian Niccol has tried to come up with fixes for the many challenges facing the coffee giant.
One of his top goals: Getting coffee to customers in four minutes or less.
Four minutes might not sound so fast when you want a morning caffeine jolt, but even that goal is not as easy as it seems, Niccol told Wall Street analysts and investors in a call late Tuesday after announcing the company’s earnings for the most recent quarter.
That showed in the company’s results. While improving, revenues and same-store sales were still lackluster, as Starbucks tries to woo back customers that were frustrated with long wait times, among other issues.
Global same-store sales slipped 4% in the first quarter of the company’s fiscal year 2025, which ended Dec. 29. Declining traffic, a long-standing issue, continued to be a problem: Same-store sales in the United States fell 4%, and they fell 6% in China, the coffee chain’s second-largest market.
While fewer customers came to stores, they spent more for what they did buy, which helped keep revenues flat from year-ago levels, at $9.4 billion, the company said after the market closed Tuesday.
The company’s net income fell nearly 23%, to $780 million from $1 billion a year earlier. Starbucks attributed that dip partly to investments it made in wages and benefits for store employees, as well as to its termination of the practice of charging more for nondairy products, such as oat and soy milks, in its beverages.
This was the first quarter of financial results under Niccol, who joined Starbucks in September after six years as the CEO of Chipotle, and he emphasized the positive.
“Despite near-term challenges, we have significant strengths and a clear plan,” Niccol said in the call. “We’re on track to turn the business around. We’re where we want to be one quarter in, but much of our work is just beginning.”
As for getting customers their orders in four minutes or less, Starbucks is leaning into technology, looking closely at its mobile ordering systems and how to smooth out periods when orders suddenly flood in, Niccol told analysts. He also said the company increased labor hours at 3,000 stores where he said staffing “had gotten too thin.”
He and other executives warned, however, that the next quarter might also look weak, as spending on technology and barista hours ramp up and as the company restructures its workforce. Starbucks, which awarded Niccol $96 million in compensation to make up for what he would have earned if he stayed at Chipotle, said it was planning to cut corporate jobs but has not said how many will be affected.
Niccol spent little time on the call discussing China, a critical but troubled market for Starbucks, but did note that he visited the country just last week. Starbucks is expanding in China even as its economy stalls.
Niccol surprised many analysts by saying he had a plan to double the number of stores in the United States but provided no timeline for that expansion. “Places like Texas, the Southeast. As we continue to open stores in those areas, they are opening with great economics,” Niccol said.
Niccol has pledged to bring back a more personal coffeehouse atmosphere with comfortable seating and the cafe experience for which Starbucks was originally known. Changes also include allowing baristas to quickly serve brewed coffee to customers at the register and bringing back the condiment station, allowing customers to add their own milk and sweeteners. More controversially, the chain has restricted its bathrooms to paying customers.
Niccol is also shaking up the chain’s North American leadership. Before earnings were released Tuesday, the company announced that both Sara Trilling, president for North America, and Arthur Valdez, the head of Starbucks’s supply chain, would be leaving the company. The North American market provides about three-quarters of the chain’s revenue.
Joining the company in newly created roles are Mike Grams, president and chief operating officer of Taco Bell, and Meredith Sandland, CEO of Empower Delivery, a restaurant software company. Grams was named the chief stores officer for North America and will be in charge of store performance, and Sandland will take over store development and design.
On top of the changes in North America, in January, Mellody Hobson, who chaired Starbucks’ board of directors from 2021 to 2024, said she was not going to stand for reelection this year, and Belinda Wong, a 25-year veteran of the company who oversaw China, retired.
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