24/7 Wall St. Insights
- Starbucks Corp. (NASDAQ: SBUX) has announced a long list of plans to revive the battered company.
- The list includes plans to improve service without raising prices.
- Also: 2 Dividend Legends to Hold Forever.
Starbucks Corp. (NASDAQ: SBUX) has announced a long list of plans to steady the battered company. Actually, new CEO Brian Niccol did the talking. Somewhere in the back of his mind, he must think the trouble at the coffee store chain is worse than he anticipated. His most important comment is that Starbucks will not raise prices and likely will hold them until the end of the company’s fiscal year in September.
His list included plans to improve service, make it easier to customize drinks, and offer some ingredients for free. The challenge will not be as much to hold the current customer base. A look at same-store sales shows it needs to regain people who left, which must be in the tens of thousands. Starbucks stores will have a condiment table. People will not be charged for non-dairy products. This list is staggeringly long.
Customers will get drinks in four minutes. According to media reports, some people have waited five times that long. Starbucks’s cups will be nice. Customers will be able to pour their own milk and sugar.
The list given to the media and analysts was embarrassing because it showed how far from customer needs Starbucks had drifted. Niccol said what should have been said long ago: “It is clear we need to fundamentally change our strategy to win back customers.”
His most important decision is his most straightforward. Don’t raise prices in a period when many Americans still believe inflation is a problem.
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