Starbucks’ (NASDAQ: SBUX) new CEO Brian Niccol has his work cut out for him.
Tasked with reassuring investors that the company’s coffee shops are still hugely popular in the U.S., Niccol also has to contend with baristas and hardcore Starbucks customers who say they want plenty of changes.
Baristas complain about what they say are chronic understaffing and poor pay and benefits, among other problems.
On Tuesday, Starbucks (NASDAQ: SBUX) pulled its earnings guidance for the coming fiscal year and reported a 6% fall in fourth-quarter same-store sales in the United States. Niccol said baristas need to be supported to provide “exceptional service” to customers.
“To succeed, we need to address staffing in our stores, remove bottlenecks, and simplify things for our baristas,” he said in a video statement.
Shares of the company were marginally lower on Wednesday.
Niccol also said he wanted to simplify the menu, fix pricing, and refine mobile orders and pay so as not to overwhelm baristas.
A handful of baristas Reuters spoke to in New York said they want Niccol to take steps to prevent chronic understaffing. Liv Ryan, a barista and union organizer at a Starbucks in Long Island, New York, said that Niccol should put “an end to short staffing.”
One barista, who did not want to be named for fear of reprisal, said he wanted to see more clear divisions between stores that focus on mobile orders and drive-throughs, and those that hew closer to the original vision of Starbucks (NASDAQ: SBUX) as laid-back coffeehouse.
Such a separation could ensure a smoother workflow, he said.
In an open letter last month, Niccol said that part of his strategy will be to make a clear distinction between “to-go” and “for-here” service. The CEO, former head of Chipotle Mexican Grill, has built a reputation for listening to his detractors and fixing their complaints.
RUDE CUSTOMERS
“We suspect multiple avenues of attack (by Niccol) are likely, including increasing labor hours at stores and reducing the frequency of limited-time promotions,” said William Blair analyst Sharon Zackfia.
Some baristas told Reuters they hope Niccol not only accomplishes his stated goals – including abandoning some of the promotions that caused surges of customer traffic and order backups at cafes – but that they also want him to provide clearer guidelines to cafe managers for banning customers who act inappropriately.
Liv Ryan said baristas have long had gripes about the lack of guidance from Starbucks on how to contend with bad-tempered customers.
“I have been told countless times that part of our job is ‘just taking rude customers,'” Ryan said. “But there’s no clear line between ‘rude’ and ‘hostile’ and even then I shouldn’t have to put up with anyone being rude to me at my job.”
As for baristas who are part of, or who aim to be part of, the new Starbucks Workers United union, they want Starbucks to complete the contract bargaining process with workers. “All I’m looking for is a collective bargaining agreement by the end of the year,” said Parker Davis, a union organizer at a Starbucks in San Antonio.
Last month, Niccol said he wanted to empower baristas to take care of Starbucks customers.
“We’ll make sure our baristas have the tools and time to craft great drinks every time, delivered personally to each customer. For our partners, we’ll build on our tradition of leadership in retail by making Starbucks the best place to work, with career opportunities and a clear growth path,” he said.
On Wednesday, Niccol said he would share more details about possible changes on the company’s earnings call on October 30.
“We found (Niccol’s focus) encouraging, given how quickly it is coming together,” Piper Sandler analyst Brian Mullan said. “While executing it will be difficult and will take time, we think the important takeaway here is that Starbucks is no longer rudderless.”
(Source: Reuters)
