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Starbucks new CEO Niccol to improve coffee culture at US stores
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Starbucks new CEO Niccol to improve coffee culture at US stores
Sep 11, 2024 12:18 AM

Sept 10 (Reuters) -

Starbucks' ( SBUX ) new CEO Brian Niccol said he would focus

on reinvigorating coffeehouse culture at the chain's stores in

the U.S. as he takes the helm in the midst of patchy demand for

its pricey lattes.

Starbucks ( SBUX ) named Niccol as its CEO in a surprise move last

month, replacing Laxman Narasimhan after the company's

comparable sales fell for the second straight quarter this year.

In his first week at the job, Niccol said in an open

letter he would initially focus on U.S. stores delivering drinks

and food on time and elevating in-store experience for customers

in a bid to "reestablish the brand as the community

coffeehouse."

There needs to be a clear distinction between "to-go"

and "for-here" services at the stores, the former CEO at burrito

chain Chipotle Mexican Grill ( CMG ) added.

Niccol said he would spend time in stores, meeting with

suppliers and partners in a bid to improve the company's supply

chain as well as its app and mobile ordering platform.

"In some places - especially in the U.S. - we aren't always

delivering. It can feel transactional, menus can feel

overwhelming, product is inconsistent, the wait too long or the

handoff too hectic. These moments are opportunities for us to do

better," he wrote.

Starbucks ( SBUX ) deployed its Siren System plan, which includes

equipment upgrades, across its U.S. company-operated stores in

the summer this year to increase the pace of service.

About its business in China, Niccol said Starbucks ( SBUX ) needed to

"capitalize on its strengths" in the market. Competition from

more affordable brands has hurt Starbucks ( SBUX ) in that market, with

comparable sales falling in the double digits for two straight

quarters.

In July, Narasimhan said on a post-earnings call that

Starbucks ( SBUX ) was open to looking at strategic options, including

joint ventures and partnerships for its business in China.

Niccol said Starbucks ( SBUX ) would work to "dispel misconceptions"

about the brand in the Middle East as Western brands take a hit

from a spontaneous boycott campaign linked to the Gaza war.

Starbucks ( SBUX ) has also encountered pressure from activist

investor Elliott Investment Management this year to improve its

business as the company's sales lagged.

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