Starbucks CEO Brian Niccol Moves to Control Morning Coffee Rush

Brian Niccol is standing in the corner of a newly renovated Starbucks in Seattle on an afternoon in mid-April. Baristas are making iced cherry chai lattes and mocha Frappuccinos with whipped cream, and warming egg bites and croissants. Customers sit in plush mustard-colored chairs and on cushioned benches in an olive tone, surrounded by wood-paneled walls. “I like it,” says Niccol, who took over as chief executive officer in September. “I like the furniture. I like the lighting. I like the music.” Mostly he likes the vibe. People camping out, doing homework, chatting with friends. There’s a guy preparing a tax return.

“Every seat is full,” Niccol says. “That’s what we want. What we should be able to do is have spaces for people that, if you want to socialize, you can socialize. If you want a moment for yourself, you have a moment for yourself.” He asks me what I think is the best seat in the house, and I tell him I’d tried a few as I alternated between grabbing a bite and working on my laptop. “I want a great seat for whatever occasion you’re having. If you want to eat, that’s probably the best seat,” he says, pointing to the cushioned bench. Since the 1980s, Starbucks has sought to be a welcoming “third place.” Stores became known for comfy seating, power outlets and Wi-Fi. But as to-go orders climbed from 60% of business pre-pandemic to more than 70% during Covid, Starbucks accelerated a plan that shrank the number of seats at stores—ultimately, it would remove about 30,000. What was left looked uninviting. Customers—unshackled from the pressure of holding up a line or giving a baroque beverage order to another human—personalized drinks more aggressively on the app. Workers—grappling with worries of catching Covid and colleagues getting sick or quitting—struggled to churn out grande iced shaken espressos with salted caramel cold foam, in caramel-lined cups, with blonde espresso, three pumps of sugar-free vanilla syrup, caramel drizzles and extra cinnamon dolce topping. An unprecedented unionization effort ensued, ignited by workers’ frustrations with what they saw as understaffing and the company’s pandemic-era policies, including around hazard pay. (Starbucks said at the time that it had stepped up for workers.)

By early last year, many customers said they were paying too much for drinks that took too long to make in coffee shops that had too little of the cozy feel they expected. Meanwhile, the company contended with a sluggish recovery in China, its second-largest market. There were also boycotts after Starbucks got embroiled in the perception that it was taking Israel’s side in the Middle East conflict, which it denied. Sales slumped for the first time since the pandemic. Then-CEO Laxman Narasimhan pledged to bring back customers. But in August, he was ousted. Niccol, who’d turned around the fortunes of Chipotle Mexican Grill Inc. and Taco Bell, was hired with a pay package valued at about $100 million.

Niccol is hustling to bring about a vibe shift. He wants homier, cozier, classic: Starbucks is no longer Starbucks; now it’s branding itself as the Starbucks Coffee Co., to emphasize its roots as a seller of whole bean coffee, tea and spices. Those nooks with cream and sugar—aka the condiment bars—were removed for Covid safety restrictions. Now they’re back, so people can stir in whatever they want, and nondairy milk is free. There are signs things are improving. More people are hanging out in cafes and ordering coffee-centric drinks, according to the company. Barista turnover is the lowest since the pandemic, when Starbucks started tracking the number. Shares are up 20% since Niccol’s appointment and about 1% this year. Daniela Sirtori reports on Bloomberg Businessweek Daily.

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