As part of the Starbucks Corp. (NASDAQ: SBUX) effort to cut its menu and make its stores more efficient, it has reduced what customers can order via the Starbucks app.
24/7 Wall St. Key Points:
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Starbucks Corp. (NASDAQ: SBUX) has reduced what customers can order via app.
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Will investors care about the new CEO’s plan to cut the menu and make stores more efficient?
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That will increase efficiency and should cut waiting times. And it is among the larger changes Starbucks has made under its new CEO, Brian Niccol, and could well backfire.
According to Bloomberg, “The coffee chain is reducing the number of items allowed per order to 12 from 15. It also removed the ability to add a splash of milk or lemonade to a classic Refresher, because there are already beverages on the menu that include those modifications.” In other words, the number of choices has dropped.
As mentioned, the decision is part of plans to cut the Starbucks main menu to lower waiting times. It will reduce the number of items baristas have to handle. Earlier in the week, Niccol said Starbucks would chop 30% of the items on its menu. He commented, “Really what we focused on is what are the items that are not, frankly, selling a lot every day?”
Other changes in Niccol’s plan include lowering the number of discounts and promotions, and allowing only patrons to use bathrooms. Customers will have to customize some of their own drinks, and Starbucks has added condiment bars so they can do so.
Niccol began to hint about the plans as early as his first month as chief executive. He wrote that baristas would have more tools to do their jobs and that orders would be “on time.”
None of this matters if Niccol cannot turn around Starbucks financially. In the quarter just announced, North America and U.S. comparable store sales fell 4%. Sales in China declined 6% by the same measure. Revenue was flat at $9.4 billion, while earnings dropped 23% to $0.69 per share.
Investors don’t care about the menu choices. They worry about the numbers.
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