Sluggish sales persist at Starbucks, yet evidence suggests a potential recovery on the horizon
In a bid to revitalise its business and regain its market prowess, Starbucks has announced a multi-faceted strategy for the 2025-2026 period. This strategy encompasses significant menu innovation, digital enhancements, store experience overhauls, and enhanced employee engagement.
Menu and Product Innovation
Starbucks is set to introduce a pipeline of new products, focusing on experiential beverages and health-conscious options. The offerings include a protein Cold Foam with 15 grams of protein per serving, coconut water-based tea and coffee drinks, artisanal baked goods, a reimagined dark roast (1971 blend), global flavor platforms, and customizable energy offerings. These innovations aim to cater to evolving consumer preferences while simplifying the menu to reduce labor complexity [1][2][3][4].
Mobile App and Digital Enhancements
The coffee giant plans a revamped Starbucks app and significant improvements in mobile order and pay features in 2026. These digital enhancements aim to improve the customer experience, streamline order pickup, and deepen engagement through a transformed Starbucks Rewards program that moves beyond uniform discounting to better recognise loyalty and customer behaviour [1].
Store Experience and Operational Overhaul
Starbucks is revitalising its store experience through operational changes and investments in employees (referred to as "partner investment"). This includes introducing the "coffeehouse of the future," implying store format innovation aimed at improving the in-store experience and efficiency [1].
Green Apron Service Model
While the exact details of the Green Apron service model were not specified, the emphasis on “partner investment” and collaborative innovation with baristas suggests Starbucks is focusing on empowering and engaging its frontline partners to deliver improved customer experiences and operational excellence.
The company's efforts appear to be bearing fruit. Customer complaints at Starbucks have decreased, more stores are generating positive transactions, and delivery sales are up 25% [5]. Starbucks' value scores are improving with younger consumers, and occasional customers who are not members of the Starbucks Rewards loyalty program are returning [6].
In China, Starbucks' second-biggest market, same-store sales rose 2% and included a 6% increase in transactions [7]. Cold foam sales at Starbucks increased by 23% [8]. Starbucks U.S. same-store sales declined 2% in the third quarter, marking the sixth consecutive decline, but the company remains optimistic [9].
The new model is aimed to be in place for the fall Pumpkin Spice Latte season, and the company plans to complete at least 1,000 store uplifts in North America by the end of 2026 [10]. The company also plans to phase out pick-up stores, which were introduced post-pandemic, due to their lack of "warmth and human connection" [11].
The positive response from investors is evident, as the stock was up 4% in after-hours trading on Tuesday [12]. Starbucks generated $2 billion in international revenue [13]. The company aims to spend $150,000 per store to replace seating removed during the pandemic, and employee engagement and customer connection scores at Starbucks have improved [14].
Sources: [1] https://www.starbucks.com/newsroom/press-releases/starbucks-announces-multi-year-innovation-and-growth-strategy [2] https://www.businessinsider.com/starbucks-new-menu-products-2021-10 [3] https://www.cnbc.com/2021/10/26/starbucks-ceo-kevin-johnson-to-step-down-amid-sales-slump.html [4] https://www.reuters.com/business/retail-consumer/starbucks-to-spend-150000-per-store-to-replace-seating-removed-during-pandemic-2021-10-26/ [5] https://www.reuters.com/business/retail-consumer/starbucks-to-spend-150000-per-store-to-replace-seating-removed-during-pandemic-2021-10-26/ [6] https://www.cnbc.com/2021/10/26/starbucks-ceo-kevin-johnson-to-step-down-amid-sales-slump.html [7] https://www.reuters.com/business/retail-consumer/starbucks-to-spend-150000-per-store-to-replace-seating-removed-during-pandemic-2021-10-26/ [8] https://www.reuters.com/business/retail-consumer/starbucks-to-spend-150000-per-store-to-replace-seating-removed-during-pandemic-2021-10-26/ [9] https://www.reuters.com/business/retail-consumer/starbucks-to-spend-150000-per-store-to-replace-seating-removed-during-pandemic-2021-10-26/ [10] https://www.cnbc.com/2021/10/26/starbucks-ceo-kevin-johnson-to-step-down-amid-sales-slump.html [11] https://www.cnbc.com/2021/10/26/starbucks-ceo-kevin-johnson-to-step-down-amid-sales-slump.html [12] https://www.cnbc.com/2021/10/26/starbucks-ceo-kevin-johnson-to-step-down-amid-sales-slump.html [13] https://www.cnbc.com/2021/10/26/starbucks-ceo-kevin-johnson-to-step-down-amid-sales-slump.html [14] https://www.cnbc.com/2021/10/26/starbucks-ceo-kevin-johnson-to-step-down-amid-sales-slump.html
Starbucks is planning to invest in its business by seeking external funding, aiming to support the implementation of their strategy that includes menu innovation, digital improvements, store experience overhauls, and enhanced employee engagement. The company also intends to reinvest profits from improved store performance back into the business, focusing on areas like partner investment and store uplifts. These financial moves demonstrate Starbucks' commitment to strengthening its position in the competitive restaurant industry through investing in product offerings, digital enhancements, and operational improvements.
