- In today’s CEO Daily: Fortune‘s Phil Wahba reports on the early wins in Starbucks CEO Brian Niccol’s tunaround.
- The big story: Apple’s blockbuster earnings fail to impress investors.
- The markets: U.S. markets are set to drop at the open, and Bitcoin has hit a two-month low.
- Plus: All the news and watercooler chat from Fortune.
Good morning. Starbucks is heating up. Earlier this week, the coffee store company reported its first U.S. quarterly comparable sales increase in two years, helped by CEO Brian Niccol’s focus on efficient operations, consistency in service, more appealing stores and a streamlined menu that still manages to introduce new items often enough to keep people interested.
“The shine is back,” Niccol crowed on Thursday in Manhattan at his first Starbucks investor day. While even he admits it’s too early to cry victory, he does deserve credit for getting this challenging turnaround off the ground. He did so by offering the troops, from your local barista to his C-suite, something whose absence has sunk comeback attempts by other CEOs: clarity of mission and simplicity.
That discipline extends to Starbucks’ $8 billion international business. Starbucks International CEO Brady Brewer told me that the vast majority of the 20,000 or so new stores it wants to add abroad in coming years will be in those markets where it is already present and thriving, rather than new ones.
Niccol has dubbed his turnaround “Back to Starbucks.” That means going back to what made Starbucks popular in the first place. People like being able to actually sit down and enjoy their coffee? Let’s jettison the seat-free Starbucks locations that existed solely for mobile order pickup. (The company is adding 25,000 seats to its company-operated U.S. stores.)
How about store design? When it came to creating new store layouts, Starbucks now designs with store workers and not just for them. Starbucks now tests new ideas in five stores in real operating conditions. (We’ve all been at a chaotic Starbucks watching employees bump into each other because HQ gave them an unworkable layout.)
Another example: under Niccol, each store is graded on the five most important criteria, a fraction of the metrics used before: customer experience, performance during peak hours, employee scheduling, product availability, and health and safety.
Niccol has a reputation for succinctly communicating what needs to be done, simplifying processes and making clear what comes next after each step in the turnaround. It’s a playbook familiar to those who saw how he rehabilitated Chipotle Mexican Grill following food safety disasters. He was methodical in how to repair the damage and earn back the trust of customers and workers before going on offense. By the time he was done, Chipotle sales had doubled.
Too many turnaround attempts see a CEO throwing spaghetti at the wall in the hopes something will work, further confusing the rank and file and sapping their confidence in management. When you look at the nascent Starbucks turnaround and the return to form of brands like Ralph Lauren and Bloomingdale’s, you see a common thread: The CEO provides a clear direction, gives frequent updates and “proof” the plan is working, and continually looks ahead to the next step.
“Back to Starbucks reconnects us with our core. It gives us a platform to build the best of Starbucks with clarity, confidence and purpose,” Niccol said. So far, his approach is working. Contact CEO Daily via Diane Brady at [email protected]
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