'It's about time they stopped charging for all the different milks,' said one restaurant-industry consultant
New Starbucks Chief Executive Brian Niccol recently announced that the company will undergo a series of sweeping changes in hopes of boosting sales and getting customers to come back to its cafes.
Some of those changes include no longer charging customers extra for ordering drinks that contain nondairy milks (soy, oat, almond), bringing back its condiment bar and offering ceramic mugs to people staying at cafe locations longer.
The shifts come as Starbucks (SBUX) reported weaker U.S. sales amid lower traffic to its stores in its latest quarterly earnings report.
"It's about time they stopped charging for all the different milks, partly because it's just not worth the time it takes to ask and to do," Clark Wolf, a restaurant-industry consultant with over 35 years of experience, told MarketWatch. "And the condiment thing is a normal coffee-bar experience. There's too many permutations to run a business comfortably."
Wolf said he's in favor of all the new Starbucks changes, while noting that many of the updates are mainly Starbucks reverting back to some of its older policies rather than inventing something revolutionary. He believes the company needs to further emphasize the in-store experience for customers and make the ordering process more efficient.
"At certain locations, they have paid more attention to online ordering, and then the window, and then the counter. You're turning off the most loyal customer," Wolf said. "The loyal customer at Starbucks is the one who goes in and talks to somebody.
"It's fine for the person who wants all that ridiculousness, and not for the people standing behind. We go to a coffee place for the drink we want, to be comfortable and to have it be easy and friendly," he added.
Other analysts who recently spoke with MarketWatch were also generally optimistic about Starbucks's changes, though some analysts believe the shift in approach could get expensive. Oppenheimer analysts recently said that "the early impact of intensified investments will likely cause 2025 to be a 'reset year' for earnings."
And what do customers think? Do they like these new additions, and do they think other improvements need to be made, too?
Cord Lehman, a 28-year-old content creator in New York, said he goes to Starbucks nearly every day and is a big fan of some of the changes, including removing the nondairy surcharge.
"Removing the additional charges for the nondairy items is a winner," Lehman told MarketWatch. "Everyone's body is different; every stomach has a different tolerance. You shouldn't be 'punished' because you prefer soy milk or almond milk over whole milk.
Megan Nicholson, a 37-year-old teacher from California, also gets her Starbucks order with nondairy milk, and applauded the change.
"As someone with a lactose sensitivity, I have to order the nondairy milk and I don't think I should have to pay more for that," Nicholson said. "Eliminating these charges will keep me coming back."
Starbucks said nondairy milk is the second-most requested customization from Starbucks customers, only behind adding a shot of espresso. The elimination of the additional fees would result in a 10% reduction in price for those types of drinks.
See: The latest inflation woe: Your fast-food breakfast now costs 53% more
Chanakya M., a 22-year old from West Virginia, was one of many frequent Starbucks customers who told MarketWatch they are hoping for better food options at the chain. They said they want "healthy breakfast sandwiches, not the frozen ones," and hope the overall quality is improved.
Other changes that some Starbucks customers who spoke with MarketWatch mentioned frequently was a separate value menu for certain foods or drinks.
"I think a value menu would be successful, offering certain drinks at a special price either regularly or semiregularly," Nicholson said. "They have the 2-for-$10 deals sometimes - there should be more of those."
Niccol, who joined Starbucks from Chipotle Mexican Grill Inc. (CMG), called the company's latest earnings report "very disappointing," adding that "it is clear we need to fundamentally change our strategy to win customers back and return to growth."
Starbucks reported net income of $909.3 million, or 80 cents a share, in its earnings, down from $1.22 billion, or $1.06 a share, in the same quarter last year. Same-store sales declined by 7%.
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-Weston Blasi
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