New Starbucks CEO Brian Niccol is pushing the brand to pull back on discounting and promotions, according to the Wall Street Journal.
The quick-service giant hopes to reposition as a premium coffee experience and focus on unique beverages that encourage guests to stay around cafes for longer periods, the Journal reported. Niccol said in an open letter in September that he wants the brand to bring back its community coffee house identity. He also noted that customer-employee relationships have become too transactional, with an overwhelming menu and inconsistent products.
Starbucks is also stepping back from promotions to assist stressed employees who deal with high volumes during these windows. One of the biggest complaints under previous CEO Laxman Narasimhan was sluggish order preparation times.
The Journal said Starbucks will lure customers with additional loyalty points instead of discounts and won’t broadcast promotions on a large scale during the holidays.
The brand’s U.S. transactions fell 7 percent during its fiscal Q2. Same-store sales fell 3 percent as well. It marked the worst performance outside of the pandemic or Great Recession. In Q3, the three-month period that ended June 30, domestic comps fell 2 percent, consisting of a 6 percent decrease in traffic and 4 percent rise in average ticket.
In 2024, Starbucks ran several promotions to attract customers, particularly through its rewards program, which has more than 30 million members. This includes BOGO weekends, “Summer App-y Days” featuring personalized offers every Monday and 50 percent off every Friday, and $3 grande-sized drinks on Thursdays.
Along with re-emphasizing the role of the community coffee house, Niccol aims to improve the in-store experience with enhanced seating, store design, and distinguishing dine-in from to-go services; strengthen brand identity by building an association with quality coffee and community, not just quick transactions; and empower workers with better tools and career opportunities.
Meanwhile, McDonald’s revealed in September that its $5 Meal Deal will run through December. Burger King said its $5 Your Way Meal would run until at least October.