After 18 months of declining sales, Starbucks has begun to see a recovery, driven by a turnaround strategy focused on price simplification and enhancing the customer experience in its stores.
The coffee chain reported a 1% rise in global same-store sales between July and September, marking its first increase in nearly two years.
The increase was largely driven by international markets, where same-store sales rose 3%, while performance in the US remained flat.
Starbucks’ chief executive, Brian Niccol, told investors that while the company still faces challenges, it is “moving in the right direction.”
As part of a restructuring plan announced in September, Starbucks closed 627 stores in the last quarter. About 90% of the closures were in North America, while 10 locations in the UK also permanently shut their doors.
In February, the company cut 1,100 corporate roles worldwide as part of efforts to “simplify” its business.
Niccol, known for boosting Chipotle’s performance, was hired last year to tackle a 3% drop in Starbucks’ global sales.
Niccol introduced a comprehensive restructuring plan called ‘Back to Starbucks,’ which has streamlined the drinks menu, reinstated baristas writing customer names by hand, and focused on creating a more welcoming café environment.
Other initiatives included Starbucks removing extra charges for non-dairy milk in the US and Canada last year.
In an investor update this week, Niccol said Starbucks had made “much-needed investments” in staffing, and nearly half of its US stores now open at or before 5am.
The company has also focused on improving speed of service and is trialling a new coffeehouse design in New York, featuring lower build costs and more efficient use of space.
Niccol said Starbucks is working to bring “warmth, texture and seating” back into its cafés, following a period when many sites removed sofas, switched to wooden interiors, and prioritised delivery orders.
According to Niccol, approximately 70 stores have undergone redesigns, resulting in measurable improvements in sales.
Niccol said: “We set a plan. We’re working the plan. The plan is working. We have more work to do we’re building momentum. Regardless of the headwinds and tailwinds we may encounter, I’m confident we have the right team and strategy to deliver long-term sustainable growth.”
Starbucks operates approximately 520 company-owned stores in the UK, alongside nearly 900 franchise locations.
It is the world’s largest branded coffee chain, with over 39,000 stores globally.
