Authored by Katabella Roberts via The Epoch Times (emphasis ours),
After six consecutive quarters of declining sales, Starbucks CEO Brian Niccol said on July 29 that price increases at the Seattle-based coffee giant would be a last resort.
Niccol, the former Chipotle chief executive who became CEO of Starbucks in September 2024, vowed in January to turn the global coffeehouse chain around under his “Back to Starbucks“ initiative.
The plan aims to bolster sales by enhancing the in-store experience, returning the condiment bar, writing on cups, and re-introducing a simplified menu and a revised code of conduct.
Speaking during an earnings call, Niccol stated that Starbucks has made progress this quarter and is ahead of expectations.
He said Starbucks plans to replace thousands of seats across its chain.
“We slowed new builds and major renovations to prioritize a new coffee house uplift program, with a target investment of approximately $150,000 per store and minimal to no downtime,” Niccol said.
“Uplifts are intended to quickly replace thousands of seats we removed and introduce greater texture, warmth and layered design. Work is accelerating now in New York City. We’ll begin in Southern California later in Q4. And by the end of calendar year 2026, we will have completed at least 1,000 uplifts across North America.”
Starbucks has also begun working on the “coffeehouse of the future,” he said.
“We have a new standalone prototype that will open in fiscal 2026 that has 32 seats, a drive-thru, and a roughly 30 percent lower cost to build,” Niccol said. “A small format version with approximately 10 seats is under construction in New York City and will open in the next few months.”
Despite the declining sales, Niccol also said, “Pricing is always the last lever I like to pull.”
“There are times where it makes sense to take some price, and when those situations present itself, we’re going to do it in the least amount of pricing necessary. I prefer to always hold back on that one as much as possible,” Niccol said.
“So, will we have to use it in the future? Absolutely. It’s going to be the last lever I’d like to pull and when we pull that lever I probably want to do as little as possible.”
Last week, tech billionaire Elon Musk opened what he called a “retro-futuristic diner“ in Hollywood on July 21.
Besides coffee and food, the Tesla diner offers electric vehicle owners a bank of solar-powered fast-charging stations, two huge outdoor LED movie screens, and an Optimus robot serving popcorn.
“If our retro-futuristic diner turns out well, which I think it will, [Tesla] will establish these in major cities around the world, as well as at Supercharger sites on long distance routes,” Must posted on X on the diner’s opening day.
On Tuesday, Starbucks reported that its net revenue rose 4 percent to $9.5 billion in the fiscal third quarter ending June 29, beating analysts’ estimate of $9.31 billion.
Global comparable store sales declined 2 percent, driven by a 2 percent drop in transactions, the company said in its earnings report.
The decline was partially offset by a 1 percent increase in average ticket price, the company said.
Analysts on average had projected a 1.19 percent decline, according to data compiled by LSEG.
In its largest North America market, the drop in quarterly same-store sales remained steady at 2 percent, Starbucks said.
In China, where Starbucks faces intense competition from local rivals like Luckin Coffee and Cotti Coffee, comparable store sales rose 2 percent, driven by a 6 percent increase in transactions, partially offset by a 4 percent drop in average ticket, Starbucks said.
The company reported a profit of 50 cents per share on an adjusted basis, marking a 46 percent decline over the prior year and missing estimates of 65 cents.
It said operating margin in the third quarter contracted 650 basis points year-over-year to 10.1 percent, primarily driven by higher spending tied to its “Back to Starbucks” initiative, including additional labor hours.
Starbucks’ stock was up more than 4.6 percent in after-hours trading following the earnings call.
Jill McLaughlin contributed to this report.
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