After two decades going to Starbucks every day at 4:30 a.m., longtime customer Tony Dennis abandoned the company last year.
“I was frustrated,” he told CNBC.
The customer experience he used to love had disappeared. Baristas didn’t engage with him, despite his daily visits. At the same time, the cost of his double-shot tall nonfat lattes and double-shot tall nonfat cappuccinos kept climbing.
The 65-year-old Las Vegas real estate developer wasn’t the only Starbucks customer who no longer felt the same loyalty. Following a drift of customers away from the chain and two disastrous earnings reports, Starbucks’ board ousted then-CEO Laxman Narasimhan and poached Brian Niccol from Chipotle, where he led a turnaround after the burrito chain’s foodborne illness scandal.
Tuesday marks Niccol’s one-year anniversary at the coffee giant, and reviews of his push to revamp the chain are mixed. Same-store sales and traffic are still shrinking as customers choose to caffeinate at home or switch to newer competitors, like Dutch Bros. or 7 Brew.
Some of Niccol’s changes have rankled customers and baristas. And investors are realizing that a comeback might take longer than they initially predicted. The stock has fallen 7% since Niccol took the reins.
“Obviously, there’s a lot of excitement when he comes in, he’s going to make a lot of immediate changes. But I think the reality is that this doesn’t happen overnight,” said Logan Reich, RBC Capital Markets analyst.
Brian Niccol, CEO of Starbucks, speaking with CNBC on Oct. 31st, 2024.
CNBC
From his first week at the helm of the company, Niccol pledged to bring the coffee giant “back to Starbucks,” returning to its roots as a so-called third place to reverse the chain’s troubling sales declines. Wall Street liked his plans and his resume, which included leading Yum Brands’ Taco Bell and presiding over a successful turnaround at Chipotle. Former CEO Howard Schultz, who turned Starbucks into a global coffee giant, gave his blessing for the hiring and has supported his turnaround strategy.
While the effort has not gone as smoothly as Niccol’s champions would have expected, there are still promising signs. The company posted its best-ever U.S. sales week for company-owned locations when the pumpkin spice latte and other fall drinks returned to menus last month. Starbucks is accelerating its rollout of its “Green Apron Service” program designed to improve hospitality, citing improved sales at test locations.
Niccol himself has said the turnaround is ahead of schedule.
“What we’re really excited about is we’re seeing both non-Rewards customers come back in a big way, as well as Rewards customers. That is, to me, the sign that we’re doing the right things, both in the store and outside of the store,” Niccol told CNBC’s Kate Rogers in an interview that aired on Tuesday.
Back to Starbucks?
Signage at a Starbucks coffee shop in New York, US, on Monday, July 28, 2025.
Victor J. Blue | Bloomberg | Getty Images
For Starbucks’ new era, Niccol turned back to the coffee chain’s early days.
Under Niccol’s leadership, the early stages of the turnaround plan came together quickly. He said he spent several weeks talking with customers and employees before stepping into the role, which shaped his early ideas about how to fix the company and bring it back to its former glory.
He named reviving the U.S. business as his initial priority. To draw customers back, its marketing would focus on coffee. Orders would be ready in four minutes or less. The drink pickup stations would no longer be chaotic.
Its stores — now internally called “coffeehouses” — are becoming cozier and more welcoming to customers who wanted to linger. Familiar touches, like the condiment bar, have reappeared. Unpopular menu items, like the Royal English Breakfast Latte and the White Hot Chocolate, have disappeared.
Some customers are already coming back.
Dennis saw the changes at his local Starbucks taking hold in real time over the last six-to-nine months. A temporary defection to Dunkin’ didn’t stick. He prefers to drink his coffee inside a cafe, lingering for an hour or two to get started on his workday and chat with other regulars.
“What drove me back is that the alternatives are no better, and I’ve seen the changes — there’s an engagement, there’s a commitment to the customer experience again, to create a place for people to hang and have fun and be social,” Dennis said.
But not all of Niccol’s changes have been well received.
Take his mandate that baristas would start writing messages with Sharpies on drink cups again. The practice dates to the analog days, when baristas needed to write customers’ names manually to differentiate orders. But by 2016, stickers replaced handwriting as mobile ordering grew more popular, and the practice completely disappeared in 2020 with the onset of the Covid-19 pandemic.
“It’s going to give [baristas] the opportunity to put that additional human touch on every coffee experience as well,” Niccol said on the company’s earnings conference call in late October, announcing the change.
But the Sharpie messages can make baristas’ jobs a little bit more difficult, particularly if their location is understaffed.
“If we’re in a rush, and we only have two people working, we are still expected to write on every single cup,” said Sabina Aguirre, a Starbucks barista in Columbus, Ohio, who helped her store unionize in May. “And if my manager notices a single cup that doesn’t have writing on it, that will immediately become a ‘coaching moment.'”
As a customer, Dennis said that he appreciates the personal touch, even if it is a “goofy thing.”
“I thought it was kind of affected and not authentic … but I’ve lived with it for a few months, and it may take them another 30 seconds to deliver my coffee, but I like the tone that it sets that ‘we’re a customer-obsessed organization,'” he said.
New executives and union talks
A barista pours frothed milk into a drink inside a Starbucks Corp. coffee shop in New York.
Victor J. Blue | Bloomberg | Getty Images
Niccol’s new strategy also brought changes to the company’s workforce.
It started with the top ranks, as Michael Conway, CEO of the company’s North American business, left after being in the job for under a year. So did Sara Trilling, president of the North American business, and Arthur Valdez, the company’s chief supply officer. Mellody Hobson, who had served as chair of the board before handing off the title to Niccol, stepped down from her seat after nearly two decades with the company.
Niccol filled the C-suite with many past colleagues from Taco Bell, like Meredith Sandland, who serves as Starbucks’ chief store development officer, and Mike Grams, who now is the company’s chief operating officer. Tressie Lieberman, a Chipotle and Yum alum, was an early hire as Starbucks’ global chief brand officer.
Nordstrom alum Cathy Smith joined as chief financial officer, replacing Rachel Ruggeri.
But that wasn’t the only reorganization happening at the company.
In February, Starbucks laid off about 1,100 corporate workers. At the time, Niccol said that the job cuts were meant to increase efficiency and accountability and reduce complexity.
And in July, Starbucks announced that corporate employees will have to return to the office four days a week starting in October — or take a buyout.
The announcement drew controversy because Niccol, a longtime Southern California resident, wasn’t required to relocate to Starbucks’ headquarters in Seattle when the company hired him. In his offer letter outlining his employment terms, the company pledged to establish a small remote office in Newport Beach, California. These days, he defaults to in-person work in Seattle when he isn’t traveling, according to the company.
But the vast majority of Starbucks employees who have been affected by Niccol’s policy changes work in the chain’s roughly 9,000 company-owned locations.
For years, baristas have complained about understaffing and inconsistent hours, sparking a broad union push across the U.S. The company has said that it increased staffing this summer and gave managers more input on how many baristas they need. Next year, most North American locations will add an assistant manager to their rosters.
But the biggest change comes from the chain’s “Green Apron Service” program, which is backed by additional labor hours to ensure proper staffing and “smart queue” technology to improve service times. It also includes operating standards that emphasize connecting with customers.
“It’s already helping us deliver better throughput in the morning and through the balance of day, while creating more time for customer connection and service,” Niccol wrote in a letter to employees on Monday, celebrating the one-month anniversary of the nationwide rollout.
Aguirre criticized the new strategy for dedicating a position to a “host” who hands off drinks and chats with customers, saying that it does little to help with understaffing. However, other baristas have noted that the role is more flexible and can rotate to making drinks when needed.
More broadly, Starbucks Workers United, which represents more than 600 company-owned locations in the U.S., has criticized management for not returning to the bargaining table. Weeks into the job, Niccol committed to working with the union.
Starbucks Workers United spokesperson Michelle Eisen said that talks fell apart several months after Niccol joined the company and that the company hasn’t responded to requests from the union to restart negotiations.
Starbucks said that the union represents only about 5% of its workforce and doesn’t represent the thousands of workers who are excited about Niccol’s strategy.
“The facts show Back to Starbucks is making the experience better for both customers and partners,” a Starbucks spokesperson said in a statement to CNBC. “Retail partner turnover is at record lows and about half the industry average. More partners are getting the shifts they want. And more partners than ever recommend Starbucks as a great place to work.”
Bears vs. bulls
Niccol’s appointment initially thrilled investors.
On the day that Starbucks announced his hiring, shares of the company soared 24%, the best day ever for the stock. Chipotle, Niccol’s then-employer, saw its own stock close down 7% that day, in another demonstration of Wall Street’s appreciation for his leadership.
But 12 months later, some investors seem to be losing their faith in Niccol. Shares have fallen 7% over the last year, dragging the company’s market cap down to $95.6 billion.
Investors expected the turnaround to bear fruit sooner. Store traffic and profit margins are still far from pre-Covid levels. Wall Street expected same-store sales to grow again by its fiscal second quarter ended in March this year; now, most analysts aren’t projecting quarterly same-store sales growth until the end of the calendar year.
And then there is skepticism about Niccol’s broader strategy.
“There’s still sort of question marks from investors on whether or not all this is going to work,” Reich said. “I think there’s some questions around whether or not leaning into the ‘third place’ is going to work, just because you have to balance being a $100 billion company and also wanting to be the local coffeehouse vibe — and managing all that with mobile ordering, which is super high velocity.”
Zacks Investment Management sold off its Starbucks holdings about two years ago, shortly before its same-store sales began falling, according to Brian Mulberry, senior portfolio manager at the investment firm. But he keeps an eye on the coffee chain, waiting for Starbucks to once again drive quarterly earnings growth consistently.
“Our commitment is to keep Starbucks on our watch list for probably the next 12 months, to give them another year to see if there’s progress coming back,” Mulberry said.
While no longer a Starbucks shareholder, Mulberry is a loyal customer. Through his travels, he experiences a range of Starbucks experiences, whether he’s in midtown Manhattan or Indianapolis.
“The consistency of the product is good, but the consistency of the service is still something that’s lacking,” he said.
Plus, with few exceptions, Starbucks has given Wall Street very little visibility into its financial targets and the costs of the turnaround. In October, the company suspended its annual forecast through fiscal 2025, citing the recent CEO transition and the “current sate of the business.”
“It’s been hard to gauge where they are on their strategic path,” William Blair analyst Sharon Zackfia said.
Starbucks has shared some numbers. In late July, the company said it would invest $500 million in labor over the next year tied to its “Green Apron Service” model.
“Clearly, there has been a lot, and there will continue to be a lot of incremental investments in labor,” Zackfia said. “So our idea that the margin reset would be potentially deeper than investors had expected, I think that’s coming to fruition, maybe even more than we had expected honestly.”
But investors will likely have to wait until Starbucks hosts its planned investor day in early 2026 before they receive answers to most of their questions about the company’s financial targets.
The road ahead
A Starbucks store is shown in Encinitas, California, on Feb. 24, 2025.
Mike Blake | Reuters
Niccol still has plenty of work to do.
He has teased innovation coming next year, like improved pastries. By the end of 2026, the company plans to give makeovers to roughly 1,000 of its U.S. locations, adding back more seating and other small tweaks, like more welcoming lighting.
And then there are changes coming for Starbucks’ loyalty program. Niccol said in July that Starbucks Rewards had become too focused on discounts, so he wants to tailor the program to encourage more engagement from customers.
“I think many of us have thought for years and years and years that Starbucks had the gold standard of rewards programs,” Zackfia said. “That is something that’s still very nascent, and many of us are still trying to figure out what that really means.”
The fate of Starbucks’ business in China is still up in the air, too. In October, the company said that it was exploring strategic partnerships for its second-largest market, which has struggled ever since the pandemic. After lockdowns abated, local rivals who can undercut the chain on pricing have stolen market share from the U.S. company.
More recently, Starbucks has said that it has received “significant interest” from more than 20 parties. Reuters reported on Friday that bidders are valuing the company’s China unit at about $5 billion. Given the size and growth potential of the business, many expect that Starbucks will just sell a stake in the division.
“Today we have 8,000 stores, and I think in the future, we have 20, maybe even 30,000 stores, in China,” Niccol told CNBC in the interview that aired Tuesday. “Obviously, we’re working through what is the right partnership so that we can grow and capture that 20, 30,000 store opportunity.”
That kind of long-term perspective also applies to Niccol’s broader strategy for the company.
And investors may have to be patient.
“It may be some time before Starbucks gets truly back to Starbucks,” RBC Capital Markets’ Reich said.
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