Chipotle sinks as Starbucks soars on CEO shakeup
'Barron's Roundtable' panelists offer their economic outlook and analyze Starbucks and Chipotle stock.
Starbucks CEO Brian Niccol reaffirmed his commitment to simplifying the coffee chain's menu on Tuesday, revealing plans to cut 30% of its food and beverage offerings.
"In the coming months, you'll see us begin to optimize our menu offerings, resulting in a roughly 30% reduction in both beverages and food SKUs by the end of fiscal year 2025," Niccol told analysts on an earnings call.
Niccol – just five months on the job – said the company will still respond to customer trends and their changing preferences in order to innovate its selection of beverages and food.
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Niccol took over the struggling coffee chain from former CEO Laxman Narasimhan in September and, in short order, announced several changes to its stores, including bringing back the condiment bar. Niccol also said the company would revert cafes back to their former "coffee house" aesthetic with "personal touches" like mugs and sharpies, all in an effort to reverse a slump in sales and declining foot traffic.
Part of his immediate strategy also included simplifying the coffee chain's "overly complex menu" to better align with its identity as a coffee house company, separating mobile order pickup from the cafe experience, and fixing its pricing architecture. Niccol also told Gxstocks in an exclusive interview in December that he aims to make pricing on its app more transparent.
A barista pours steamed milk into a beverage cup at a Starbucks cafe. (Waldo Swiegers/Bloomberg via Getty Images / Getty Images)
"We've been focused on simplifying our menu to position partners for success, improve consistency, drive customer satisfaction, and enhance our economics," Niccol told analysts. "As part of this work, we made some late simplifications to our holiday product lineup and believe we have more opportunities ahead as we follow a disciplined stage-gate process to innovate and bring to market fewer better beverage and food offerings that reflect our premium positioning."
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| SBUX | STARBUCKS CORP. | 107.15 | +6.74 | +6.71% |
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On Monday, the condiment bars – which were removed during the COVID-19 pandemic – returned to Starbucks locations throughout the U.S. and Canada, offering customers the ability to add their own creamer, milk and sweeteners.
The Starbucks logo is displayed on a cup and bag at a Starbucks store on October 29, 2021, in San Francisco. (Justin Sullivan/Getty Images / Getty Images)
Baristas also began to put "any" drinks ordered "for here" in coffee mugs, glasses or a customers’ personal cup. The company also brought back free refills of hot brewed or iced coffee, or hot or iced tea for dine-in customers during the same visit.
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In November, the coffee giant also stopped charging customers for soy milk, oat milk, almond milk and coconut milk at company-owned and operated locations in the U.S. and Canada. The move resulted in a 10% price drop for customers that customize their drinks with non-dairy milk, according to the company,
As part of its strategy to improve workforce morale, the company plans to double its paid parental leave benefits this spring. For some workers, it's as much as three times the original amount.
