Starbucks CEO Brian Niccol is facing a daunting challenge as the world’s largest coffee chain struggles with declining sales, CNN reports.
The company unexpectedly released its preliminary earnings report Tuesday evening, revealing a sharp drop in sales for the third quarter in a row.
Global sales plummeted by 7%, driven by a 6% decline in the United States and a staggering 14% drop in China. This dismal performance prompted Starbucks to take the drastic step of suspending its financial guidance for the remainder of the year. Shares fell nearly 5% in premarket trading Wednesday.
Niccol, who recently took the helm after a successful stint at Chipotle, acknowledged the gravity of the situation. “Our financial performance makes it clear that we need to fundamentally change our strategy so we can get back to growth,” he said in a statement.
He identified several areas for improvement, including simplifying the “overly complex menu,” addressing staffing levels at cafes, and optimizing pricing to ensure “every customer feels Starbucks is worth it every single time they visit.”
Niccol has already implemented some changes, including a shift in marketing strategy. Starbucks recently launched ASMR-like commercials highlighting the sounds and visuals of its handcrafted coffee. The company is also moving away from solely targeting its rewards program members and aiming to attract all customers.
The company’s full earnings report is scheduled for release on October 30.
