Day: September 9, 2025

Wall Street was thrilled when Niccol was named as Starbucks’ new CEO. Shares surged 25% on the day of the announcement.

The enthusiasm didn’t last.

Over the past 12 months since Niccol started the job, the stock has fallen by nearly 9%. By comparison, the S&P 500 is up 19% over the same timeframe.

Investors want more evidence that the company’s turnaround efforts are improving.”While our financial results don’t yet reflect all the progress we’ve made, the signs are clear — we’re gaining momentum,” Niccol said during Starbucks’ Q3 earnings call in July.

Earlier this month, Niccol said in a message to employees that the annual launch of the Pumpkin Spice menu helped “deliver a record-breaking sales week across our US company-operated stores” and the company’s “strongest Tuesday sales day ever.”

But analysts are still keeping a close eye on the coffee giant’s bottom line.

“Traffic has to improve, and repeat visits from loyal customers have to get rolling again,” Asit Sharma, a senior investment analyst at The Motley Fool, told Business Insider. “Those are the types of metrics that are going to show that people are coming back into stores more frequently and buying more.”

Despite the stock’s underperformance, analysts, including Andrew Charles at TD Cowen, remain optimistic.

“We believe Starbucks is a big ship to turn, but Mr. Niccol is the right person to figure it out,” Charles said.

To reduce wait times and enhance service, Niccol announced tweaks to the Starbucks ordering system. That included reducing the maximum number of items customers can order online, introducing a new algorithm for mobile orders, and encouraging baristas to get drinks in customers’ hands in four minutes or less.

Starbucks brought back the self-serve condiment bar, refurbished some of its cafés with comfy chairs and ceramic dishware, and announced plans to convert some pick-up-only stores to embody the vibes of a cozy community hub.

It also started offering free brewed coffee and tea refills to encourage customers to spend more time in stores.

While it’s too soon to know if the changes are affecting consumer sentiment, data from Placer.ai, the location intelligence and foot traffic data software firm, shows that the rate of visits to the chain has improved year over year, suggesting that the “Back to Starbucks” campaign is beginning to drive a turnaround.

Ming Yii Lai, a strategy consultant at China-focused Daxue Consulting, said the biggest difference she has seen with Starbucks over the last year is “the move away from transactional pickup coffee stores and the return to the ceramic cups, which rejuvenate Starbucks’ iconic ‘third place’ feeling.”

Starbucks’ menu had become a complicated behemoth. Shortly after taking the helm, Niccol announced that Starbucks would cut 30% of its menu offerings by the end of 2025.

“We’ve been focused on simplifying our menu to position partners for success, improve consistency, drive customer satisfaction, and enhance our economics,” Niccol said on a January earnings call.

Some options have been eliminated outright. The pricing structure for the remaining drinks has also changed. Starbucks no longer charges for non-dairy creamers, and it simplified the fees for syrups and powder add-ins.

Dipanjan Chatterjee, a vice president at the Massachusetts-based market research company Forrester, said Niccol’s effort to “shed complex and underperforming products” has made room for more innovation, such as with its coming protein-based drinks.

Niccol implemented a new dress code earlier this year, requiring in-store staff to wear a solid-color black shirt and either black, blue denim, or khaki pants. Some employees protested the change by staging walkouts in May.

The CEO also implemented a strict return-to-office mandate for corporate workers that requires most staff to work from offices in Seattle or Toronto four days a week. Corporate employees previously told Business Insider they were worried the shift signaled that the company’s beloved people-first culture was eroding.

Michelle Eisen, a spokesperson for the Starbucks Workers United union and a 15-year barista veteran, told Business Insider that, while some of the changes — like the self-serve condiment bar and menu streamlining — “could be positive,” she felt baristas don’t have the staffing support to ensure the changes are executed well.

“On its face, these things sounded pretty good, but unfortunately, they were not implemented properly,” Eisen said.

An August survey of 737 current Starbucks baristas, conducted by the Strategic Organizing Center, a coalition of labor unions, found 91% of respondents reported issues with understaffing at their stores.

Baristas at more than 300 locations went on strike in December 2024 over issues related to pay and unresolved cases related to labor disputes. As of July, Starbucks had a total of more than 40,000 stores worldwide, with 17,230 in the US.

This summer, Starbucks said it would invest $500 million in additional labor hours and operations and hire at least one dedicated, full-time assistant store manager in each of its company-operated stores.

A spokesperson for Starbucks told Business Insider that employee engagement scores are up, and engagement among the company’s coffeehouse leaders is nearing historic highs.

“They need to double down on their own employees — if they win with their own employees, they will win with the customer, and I don’t think they’re there yet,” Kelly O’Keefe, the CEO of the marketing and strategy consultancy Brand Federation, told Business Insider. “Reconnecting with the role they once played as an employer of choice within the category is going to be vital to their success.”

China’s business is important to Starbucks. In the latest quarter, its sales in China totaled $790 million, or about 8% of its global quarterly sales.

But the company’s second-largest market has faced a different set of issues than in the US.

The country is flooded with competitors, like Luckin Coffee and Cotti Coffee, which offer discounted drinks that appeal to price-sensitive consumers. And, unlike the US, where human interactions are key, Chinese customers value an efficient digital experience, often opting for mobile-ordering options and to-go kiosks.

On a January earnings call, Niccol said he visited China that month for market research. He told investors that there were “several near-term changes” Starbucks could make to strengthen the business while continuing to explore strategic partnerships.

Starbucks launched a summertime discount promotion to woo back budget-conscious customers. It also modified its menu, releasing a sugar-free coffee line and more iced teas and non-coffee beverages to compete with local bubble tea competitors.

The company is looking to sell part of its stake in its China business to local operators. A Starbucks spokesperson told Business Insider the company is considering proposals from more than 20 potential partners.

Jason Yu, the managing director of China-based CTR Market Research, said the partnership would inject capital into the business and bring resources like real estate and local supply chain partners into the mix, which could help Starbucks grow.

Things did seem to be looking up in Starbucks China’s most recent quarter. Comparable store sales in Chinese stores increased 2% compared to the year before, driven by a 6% increase in transactions.

“I think it is quite encouraging to see that they are actually turning around their business,” Yu said.

Business Insider asked seven analysts, branding consultants, and marketing strategists to grade Niccol’s first year as Starbucks’s leader. On average, they said he’d receive a letter grade of a “B.”

“It’s a strong B,” Rebecca Hoeft, the CEO of the brand strategy consultancy Morris Hoeft Group, told Business Insider. “They need to fine-tune their strategy and create that coffeehouse feel again, that warmth that you feel when you walk in, but I think he’ll get there.”

The experts agreed he’s begun to build the momentum needed to revitalize the brand, but turning around a company the size of Starbucks is no easy feat.

Charles, the TD Cowen analyst, said Niccol needs more time to get customers fully back to Starbucks.

“In my view, it’s hard to give him a grade, given he needed to spend the last year fixing the behind-the-scenes details before the brand can go on offense to drive traffic,” Charles said. “Said differently, the operational foundation needed to be poured so when customers come back, the experience justifies returning more frequently.”

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