Starbucks Announces a Major Change That Will Disappoint Customers
A plethora of enticing value deals have rolled out at major restaurant chains in recent months amid consumer outcry about the elevated price of dining out, including a popular $5 Meal Deal at McDonald's and Taco Bell's $7 Luxe Box. However, Starbucks is now setting itself apart from these rivals by leaning away from discounting as it works to refresh its business.
Starbucks is cutting down on promotions and discounts in a move that may disappoint deal-hungry customers. The Wall Street Journal was the first to report on the change after viewing a replay of an internal Starbucks forum where the news was announced in September. When contacted by Eat This, Not That!, Starbucks confirmed the change but declined to comment further.
This shift is taking place under the leadership of new CEO Brian Niccol, who replaced his predecessor Laxman Narasimhan in September. Niccol, a former CEO of both Chipotle and Taco Bell, was tapped to lead the coffee giant after it experienced two straight quarters of sales declines. The company has cited more cautious spending from consumers as a major reason behind the slump.
When Narasimhan was still at the helm, promotions were one of the levers that Starbucks pulled in an attempt to attract customers back into restaurants. It ramped up its in-app deals and even launched a new Pairings menu in June that offered hot or iced coffee or tea with a croissant for a starting price of $5, or with a savory breakfast sandwich for a starting price of $6.
However, Starbucks is pulling back on discounts under the direction of Niccol, who believes the company should lean into its reputation for serving premium, handcrafted coffee. The chain has eliminated the Pairings menu and cut down on the number of promotions for its loyalty program users. Additionally, Starbucks doesn't plan to run broad promotions during the holiday season this year and will use advertising to support its seasonal beverages instead, per the Wall Street Journal.
The pivot away from discounting is only one part of Niccol's strategy for reviving Starbucks after the past few turbulent months. In an open letter last month, for example, he outlined plans to focus on delivering accurate orders in a timely manner, reestablish Starbucks as a "community coffeehouse," and make sure baristas have the time and tools they need to provide customers with a great experience.
"The strategy is, simply put, just making a couple powerful choices, and then we've got to execute like crazy," Niccol said during the internal company forum in September, according to the Wall Street Journal.
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