Starbucks CEO Brian Niccol took the helm in September 2024, inheriting a company facing its first revenue decline in four years amid customer complaints about high prices and long wait times. A year later, the coffee giant has halted the slide but faces fresh pressures, from surging coffee bean costs to store closures.
Coffee prices jumped 30% from January through September, squeezing Starbucks’ profit margins even as Niccol vowed not to raise menu costs this year. The restaurant chain said last month it would spend $1 billion to close underperforming stores and cut 900 jobs.
As Niccol told CBS News’ Jo Ling Kent, the retail chain can’t rule out price hikes in 2026 due to rising coffee prices, although he described this step as a “last resort.” At the same time, Niccol noted that Starbucks has no plans to introduce a value menu like McDonald’s and other fast-food chains appealing to budget-conscious patrons.
“We have a huge point of difference and that is, I think, that customer connection and the experience you get in our stores,” Niccol told CBS News. “I just believe, at the end of the day, the experience sets us apart from everybody else.”
He added, “Pricing would be one of those things that we do as a last resort, and we do it very surgically. To say never, you know, I don’t think you can do that in this environment.”
“Human-to-human”
Starbucks’ reboot involves what the company calls its “Green Apron service model,” which aims to hire more baristas, improve customer service and cut down on customer wait times.
“What we’re doing right now is making sure that we’re staffed correctly,” Niccol said. “The teams are trained correctly for the demand that we know we have in the morning, and we know that we’re growing in the afternoon.”
While other companies are turning to artificial intelligence to replace some workers, Niccol said he doesn’t envision AI supplanting baristas. He said the technology could be useful for behind-the-scenes tasks, such as managing the company’s supply chain.
“I don’t see [AI] replacing our baristas — that human-to-human experience is just too important,” Niccol said. “And I think it really separates our experience from everybody else.”
While Starbucks is bolstering its barista ranks, it also faces the threat of strikes from Starbucks Workers United, which represents 12,000 workers in some 650 Starbucks cafes across the country. Overall, the company has roughly 201,000 employees working in 10,000 stores across North America.
Niccol said he’s open to talking with union members, but also described his company’s pay and benefits as generous, adding that their demands “to date have been unreasonable.”
“We already give them the best job in retail. We have the lowest turnover in the industry — it’s below 50%,” Niccol told CBS News. “We also have the best benefits in the industry, and we actually have the best wages in the industry.”
Although other companies have noted a pullback from low- or middle-income consumers as inflation continues to tick upwards, Niccols said Starbucks patrons are still opening their wallets.
“Transactions are up, our sales are up,” Niccol said. “What we hear from them is they love the experience and they think it’s a great value proposition, so I think they’re being much more judicious in where they want to spend their money.”
He added, “And I think it’s really important that you give them a great experience so that it justifies why they chose to spend money with you.”
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