It’s the first day on the job for new Starbucks CEO Brian Niccol.
After spending the past six years helping Chipotle recover from a food safety crisis and reimagine its digital ordering strategy, he’ll try to add a jolt to the struggling Seattle coffee company.
Starbucks’ sales are slumping. It’s facing criticism over menu items, wait times, prices, and more. The company is also wrestling with union negotiations; boycotts related to the war in Gaza; and a struggling China business.
After a three-year stint leading Taco Bell, Niccol joined Chipotle in 2018. Sales at the burrito behemoth doubled under Niccol’s watch, and its market capitalization grew from around $9 billion to more than $70 billion.
That track record made Niccol a hot commodity. Starbucks gave its new leader a massive pay package and a special hybrid work plan.
But Starbucks is a different beast than Chipotle — a much larger global business with different complexities.
“Brian will hit the ground running. He certainly did at Chipotle,” said Sharon Zackfia, an analyst with William Blair. “But this isn’t low-hanging fruit, or else it would have been picked already. There’s a lot to figure out.”
One area to watch is how Niccol handles the company’s digital ordering system.
Starbucks helped pioneer mobile order-ahead capabilities more than a decade ago. Now about a third of total transactions from Starbucks’ U.S. company-operated stores come from its app.
But the app has become somewhat of a sore spot due to inaccurate wait times and the congestion it creates inside stores — both for those trying to pick up their mobile orders, and people ordering at the store itself.
Niccol helped transform Chipotle’s digital ordering system, creating a second cooking area in the back of restaurants focused exclusively on online orders, while also adding a new computer system that surfaced those orders.
“Our fledgling mobile app would be a plus for customers only if we reconfigured our restaurants to allow for skip-the-line pickup,” Niccol wrote in Harvard Business Review in 2021. “So we created grab-and-go shelving next to the cash registers in every restaurant, and we educated customers about how to find their food.”
Chipotle also created “Chipotlanes,” or drive-thru pickup windows specifically for digital orders.
Perhaps Niccol will use a similar strategy at Starbucks. Streamlining parts of the system could help retain customers as well as store employees that are fed up with understaffing.
There’s also a broader debate related to how mobile order-ahead impacts the in-store vibe.
“Starbucks seems culturally conflicted between being the equivalent of a charging station for humans and the rest and refuge area that Mr. Schultz envisioned,” Bill Saporito, an editor-at-large for Inc., wrote in an opinion piece for The New York Times.
Former longtime Starbucks CEO Howard Schultz famously championed the “third place” concept for Starbucks, the idea that the company’s coffee shops were a community gathering spot, away from home and work.
In recent public comments, including a critical LinkedIn post he published in May, Schultz suggests the company rethink its mobile ordering strategy.
He’s concerned that Starbucks is leaning too heavily on mobile — to the detriment of its brand. “It is the biggest Achilles heel for Starbucks. And it’s not even a close second,” Schultz said on a recent episode of the Acquired podcast. More from the podcast interview:
“The thing I remember the most is that we were in Chicago at 8:00 AM because people wanted to show me the problem. Everyone is getting off the loop, the train at 8:00 AM, and everyone who ordered on their app says the same thing, your drink’s going to be ready in seven minutes. Everyone shows up, and all of a sudden we got a mosh pit, and that’s not Starbucks.”
Niccol, who joined the Walmart board earlier this year, is the fourth CEO at Starbucks in the past two years. He replaces Laxman Narasimhan, who was under scrutiny as Starbucks has dealt with declining sales and increasing activist investor campaigns. Niccol will also be chairman of the company.
Starbucks’ stock is up around 20% since Niccol was named as the new CEO.
“Having followed Brian’s leadership and transformation journey at Chipotle, I’ve long admired his leadership impact,” Schultz said in a press release last month. “His retail excellence and track record in delivering extraordinary shareholder value recognizes the critical human element it takes to lead a culture and values driven enterprise. I believe he is the leader Starbucks needs at a pivotal moment in its history. He has my respect and full support.
https://ift.tt/5pjKfUx September 09, 2024 at 02:00PM GeekWire
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