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Down on sales, coffee giant Starbucks gets makeover: Protein focus, new dark roast, and more
In its fiscal third quarter, Starbucks reported revenue of $9.5 billion — slightly above analyst expectations, but same-store sales in the US dropped by 2%.
After six quarters of slipping sales, Starbucks is brewing one of its boldest transformations so far, including high-protein cold foam drinks, faster service, and a fresh hospitality model in the US.
One of the coffee giant's major bets is on a new customer service model called the ‘Green Apron Service’.
Tested at 1,500 stores over eight weeks, it focuses on better staffing during peak hours, hospitality training, and a renewed emphasis on speed and personalisation.
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Chairman and CEO Brian Niccol said Starbucks is planning to roll it out across the US starting in mid-August, expressing optimism even as the numbers show a bumpy road ahead. “I think we’ll become famous for Green Apron Service and be the defining customer service company that I think Starbucks should be,” Niccol said.
How is Starbucks changing in the US?
New software is also helping stores sequence orders, cutting down on wait times, AP reported. Niccol said 80% of in-store orders are now made in four minutes or less, a target he set last fall.
In addition to protein drinks, Starbucks plans to introduce new baked goods and a new dark roast coffee next year.
It will also test beverages made with coconut water, customizable energy drinks, and gluten-free and high-protein foods.
Niccol also said Starbucks has been working closely with employees to develop new food and drink items that can be prepared quickly and consistently.
The CEO also said that Starbucks was closing or modifying some of its approximately 90 mobile order-only storefronts, and it is developing a store prototype with 32 seats and a drive-thru window that costs 30% less than the company's current store design.
What's driving this change?
In its fiscal third quarter, Starbucks reported revenue of $9.5 billion — slightly above analyst expectations, but same-store sales in the US dropped by 2%, and overall transactions were down 4%. That was a bigger decline than Wall Street expected, and it was the sixth straight quarter that the Seattle-based company reported lower same-store sales.
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Similar stores were set up in China as well, but even as its sales picked up in China, Starbucks' same-store sales in the US fell 2% in the April-June period. US customers spent more per order, but transactions fell 4%, the company reported.
The company said its net income fell 47% to $558 million in the April-June period. Adjusted for one-time items, its earnings fell 46% to 50 cents per share for the quarter, lower than the 65 cents analysts had forecast.
(with AP inputs)
