Brian Niccol took over as Starbucks CEO last year and has unleashed a torrent of changes so quickly that it’s difficult to keep up.
The company has made organizational and executive changes. It has brought customer-friendly elements back to its coffee shops. It has started advertising and plans substantial reductions to the menu. The company is also putting the brakes on its Siren system equipment plan.
For all these changes, however, much of what Niccol is doing is right out of the Restaurant Revitalization Playbook. The ideas are familiar to almost any executive that has come into a struggling restaurant chain and sought to fix it.
Sure, Starbucks is a giant coffee shop chain, the most complicated simple business on the planet. But much of what Niccol is doing can be done at all kinds of restaurant companies in that position. And after a tough 2024, there are plenty of them. So here are a few lessons:
Take a hard look at the menu
Brian Niccol barely got through the door at Starbucks’ Seattle headquarters before he got rid of Oleato, the olive oil-infused coffee line championed by Howard Schultz. But he clearly has plans to get rid of other menu items.
Restaurant fix-it plans should always feature the menu, and heavily so. Restaurants are fundamentally about the food (or beverages in this case). When a brand is struggling, as Starbucks was last year, it means that many of its menu items weren’t compelling enough to attract a lot of customers.
What’s more, many struggling brands start loading their menus with new items in a bid to goose sales and then sometimes executives are too afraid of losing customers to remove said items from the menu. While strict menu cuts aren’t always necessary, especially if a brand has a simple menu, no comeback plan should ignore the primary purpose restaurants exist.
Operations are important
Restaurant operations aren’t all that sexy, though some restaurant operations folks will probably disagree with me. But they’re important. Especially now.
Starbucks has had a well-documented operations problem for years now. Its stores can be flooded with mobile orders that create havoc for baristas and take away from the coffee shop environment on which Starbucks was built. The company has worked for years to fix that problem.
Struggling brands have frequently cut back on staffing or capital costs in a bid to regain profitability. But such moves often damage the brand further. Customers notice when a staff is harried or slow or the restaurants have tears in the booth seats or a pothole-filled parking lot. And they have a ton of choices these days.
Fixing these operations—actually, most of these strategies—require investment on the part of the company. But such investments are necessary to get companies back on track.
Rethink marketing
Niccol has a marketing background and he clearly saw the need for Starbucks to change its marketing approach. In this case, the company focused on its loyalty members, an important constituency. Yet it had lost non-loyalty customers in droves last year. That necessitated a different idea. And so now we get Starbucks marketing around the Super Bowl.
Marketing is always important for restaurant chains, big and small. New marketing is vital for companies on the comeback trail.
That marketing often gets lost when companies struggle. Or poor marketing decisions, which was the case at Starbucks, need to be reconsidered. At the very least, companies need to tell customers about all the cool changes they’re making. They don’t need to be Super Bowl pregame and postgame ads. But they need to be there.
Find some short-term improvements
Remember when McDonald’s added All Day Breakfast? It was 2015. The company was struggling. Customers had demanded breakfast items in the afternoon. So the company gave it to them. It immediately provided a sales boost that gave the company time to find the right long-term approach to the business.
Short-term strategies that can boost sales are vital. In Starbucks case, the company made some simple operational changes to make its coffee shops seem more like coffee shops. Now it’s pushing new ads.
On our next podcast, Tijuana Flats CEO Jim Greco told me that one strategy he uses in comebacks is to get the team focused on simple strategies over the first 90 days. It can get teams focused and build confidence that can give a company momentum it lacked.
Small, early wins are important.
Break things
The smartest thing Starbucks did last year was not just in hiring Niccol, a restaurant industry veteran, but in giving him the keys to the operation. There was no six-month training period. No established plan he had to deploy. He was named chairman and CEO and given a lot of money and a ton of freedom to do what he felt necessary.
So Niccol has broken things. He ditched Oleato, a remarkably bad idea in hindsight. He’s limiting the expansion of the Siren system, one of the great results of Howard Schultz’s short tenure. He upended recent changes in operations and brought back a top marketing executive after his predecessor got rid of the position.
Struggling companies sometimes need to make big changes, even if it means destroying sacred cows or offending longtime CEOs. Don’t break things just to break things. But if things aren’t working, then things aren’t working.