Starbucks CEO promises return of Sharpie pens, condiment stations, free non-milk after disappointing Q4 earnings

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Starbucks (SBUX) CEO Brian Niccol is looking to set the table for the next chapter as Wall Street drinks in another abysmal quarter.

On Wednesday afternoon, the coffee chain reported final Q4 results that missed key metrics across the board, from same-store sales and revenue to adjusted earnings per share. In a surprise, the company released preliminary Q4 results last week.

In the quarter, revenue fell 3% year over year to $9.1 billion, while adjusted earnings per share fell 25% to $0.80.

"It is clear we need to fundamentally change our strategy to win back customers," Niccol said in the earnings call, acknowledging the results as "very disappointing."

Since taking the helm in September, Niccol has been trying to refocus the company with his "Back to Starbucks" plan, which calls for a return to basics, better pricing, and faster service. The company will aim to get customers their handcrafted beverage in four minutes or less.

"We're going to be maniacal about getting after it," he said.

A general view of people walking by a Starbucks Coffee store in Lisbon, Portugal, on August 24, 2024. Brian Niccol, CEO of Starbucks starting next month, has his travel expenses covered; the company makes a private jet available to him. This point causes strong controversy during the last week in the United States, contrasting with the environmental care and waste reduction policies that the company implements for several years. This year, Starbucks reduces the use of plastic in its cups by 20%. (Photo by Luis Boza/NurPhoto )
A general view of people walking by a Starbucks Coffee store in Lisbon, Portugal, on August 24, 2024. (Photo by Luis Boza/NurPhoto ) · NurPhoto via Getty Images

The company is rightsizing its menu to win back customers. Beginning on Nov. 7, Starbucks will eliminate the extra charges for non-dairy milk at North American locations it owns.

Niccol said the team is in the process of simplifying the menu for beverage and food. The company is slowing down the pace of menu innovation to improve the barista experience, supply chain, and marketing around launches.

CFO Rachel Ruggeri shared the company will "reduce the number" of "new stores and renovations in fiscal year 2025" to focus on "reestablishing Starbucks as the community coffee house."

As part of the effort, the chain will reintroduce personal touches like coffee in ceramic mugs, per Niccol. And baristas are getting their Sharpies back to add the human touch Starbucks was once known for.

Niccol also plans to review and revise "cafe designs to bring back more comfortable seating and amenities" to attract customers to stay. One way is to separate mobile orders and cafe experience. Another will be the return of the condiment bar in early 2025, which was moved to behind counters during COVID.

A turnaround will take time. In Q4, global same-store sales fell 7%, compared to the nearly 4% the Street anticipated. Starbucks China's same-store sales fell 14%, with a 6% drop in foot traffic and an 8% decline in the average ticket size. The company attributed the performance to "intensified competition and a soft macro environment that impacted consumer spending" in the preliminary results.