Starbucks CEO Brian Niccol is here to put the brand back on top

BRIAN NICCOL: The phase we’re in is we need to turn things around. We need to get what I would call the soul of the business back and this connection back.

We are having to reintroduce the brand to people.

We need to change the conversation of what the Starbucks Coffee Company stands for. If people just call us a corporation, I’m not doing my job.

And we’re going to use marketing to do that. And we’re going to use experiences in the store to do that.

BOB SAFIAN: That’s Brian Niccol, the CEO of Starbucks. Before taking the helm in September, Brian was CEO of Chipotle, doubling revenue and taking the fast-casual brand to new heights. At Starbucks, Brian’s taking on a business in reputational decline, with sales waning and customers dissatisfied by long wait times and high prices. Brian is pushing a so-called ‘Back to Starbucks’ plan, stripping the business to its core and prioritizing human connection. Brian shares insights for leaders everywhere about the power of small details and simple strategy. He also explains why mobile ordering is the business’s biggest pain point, his solutions for union unrest, how AI is impacting operations, the potential impact of Trump’s tariffs, and more. It’s a full cup, so let’s get to it. I’m Bob Safian, and this is Rapid Response.

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SAFIAN: I’m Bob Safian. I’m here with Brian Niccol, CEO of Starbucks. Brian, thanks for joining us.

NICCOL: Yeah. Great to be here, Bob.

Copy LinkReinvigorating the Starbucks experience

SAFIAN: Since coming to Starbucks a few months ago, you’ve instituted a slew of changes, from the menu to the bathroom policy. You just announced quarterly earnings this week. You’ve been very busy. Do you rely on extra coffee to keep up the pace, or is it natural adrenaline?

NICCOL: My caffeine intake has definitely gone up since I took this job, but I love the energy of the turnaround, and look, the coffee’s pretty darn good, too.

Safian: So you’ve called your strategy ‘Back to Starbucks,’ and it’s included the return of a condiment station, the return of handwritten names on cups. It can sound like a lot of small details. Is that all that’s required — tuning the details?

Niccol: Yeah. Look, I mean, we are in the retail business. We’re in the customer service business, and anybody that’s been involved with that knows the details do matter. And the reason why the details you just mentioned really matter for Starbucks is, frankly, those details are our point of difference. It’s how we get to another level of connection.

It’s also how we kind of create a little bit of the magic, right? What turns the coffee and that craft beverage into something really special is the moment that potentially you have in our store, the community of the store, the moment you might have with our barista, or just the moment where you grab your cup and unexpectedly there’s a little smiley face on your cup.

And it just changes the entire attitude of the customer. Obviously, you have to have a great product, you have to have a great experience, but if you have those little moments of connection, it just adds so much more.

Copy LinkHow mobile ordering impacted customer experience

Safian: Yeah. Well, it’s always interesting how, in food-related businesses, the product has to be satisfying, but so much of it is about the experience, about getting the experience to feel memorable and satisfying.

Niccol: Yeah, that’s right. And look, I think one of the things that veered Starbucks a little bit off was the whole mobile ordering, the COVID situation. I think it just really took a lot of the soul out of what this business is all about. And I’m sure, Bob, like me, you remember when the first Starbucks came to the neighborhood, and it was a moment for the neighborhood, right? I was living in Cincinnati, Ohio. I was working at Procter & Gamble at the time, and we were like, what a great spot. I really loved it when they were like, all right, Brian, grande Americano with an extra shot.

And I’m like, yeah, all right, that’s me. I’m in. So, I think just what happened with mobile ordering is it kind of chipped away at a little bit of that soul and that connection because we went to labels and we stopped writing on the cups and we started looking at how you can remove seconds from the proposition as opposed to how you maintain the experience, the connection, and the integrity of what goes even beyond a great cup of coffee.

SAFIAN: There is this kind of impression that there was an earlier Starbucks heyday, but it’s not like the stock is that far from its all-time high. So, when you think of the life cycle of the company, what phase do you feel like it’s in? Or do you see phases ahead?

NICCOL: Yeah, look, right now, the phase we’re in is we need to get things turned around, at least in the U.S. business. We need to get what I would call the soul of the business back, this connection back, and the partner experience back so that the customer feels the brand again, okay? And I think when we get that back, there’s tremendous growth ahead of us because, frankly, the reality is so many things isolate you as opposed to bringing you together.

And I think people want to get out of the loneliness phase and get back to the connection phase. I’ve had the opportunity to travel around the world, and it’s true everywhere I’ve been, whether it was Italy, which was a little bit surreal because the whole Starbucks original idea came from Howard visiting Italy. Here I am back in Milan, seeing people walk around with Starbucks cups. And it just demonstrates this is one of those human truths that just connects people all around the world, connecting over a cup of coffee or connecting with your barista. It’s just a human truth.

Copy LinkLessons from founder Howard Schultz

SAFIAN: You mentioned Howard Schultz, the founder and multiple-time CEO there. Do you talk with him about what you’re doing, or are you kind of on your own?

NICCOL: Howard’s been great. I think I’m fortunate that you still have a founder who can share the history of how Starbucks went from one store in Seattle to the iconic global brand it is. He doesn’t want to run the company.

He doesn’t want to be involved in the day-to-day. He wants you to do that. But he’s available for me to inquire about his thinking when you introduced food into the cafe and how it competed with coffee, and ‘what was your thinking when we went from hot to cold,’ and it’s great to get that insight.

Copy LinkBalancing cost reduction with quality experience

SAFIAN: I mean, it sounds like you’re systematically going through these pain points for customers, resolving them, and making them work the way, maybe the way they used to — shorter wait times, more welcoming in-store environment. One of the big pain points that is tough is rising prices.

You don’t control inflation. Proposed tariffs would hit coffee imports. Are there things that you and your team are preparing for with the prospect of these tariffs coming?

NICCOL: I think there are opportunities for us to eliminate costs that don’t add value to our customer or our partner or our product. And so we’re working very hard all the way back to, frankly, the way we grow the coffee.

What can we be doing to be more efficient, more effective, so that you don’t have to pass on some of the inflationary costs that we might face? With that said, I do believe one of our key objectives here is to create a brand that’s so valuable that we have growth that can help offset some of these challenges, too.

Where I think businesses sometimes get in trouble, and I think Starbucks might have gotten a little bit into this trouble, is they went after cost at the expense of the experience.

And that’s where you start to tread on whether you are ruining what the brand stands for, what the brand promises, and what the brand can deliver. So we just have to pull back in those areas and make sure that we are only really focused on cost reduction in those places that don’t add value to the proposition.

Copy LinkInside the decision to change the name of Starbucks

SAFIAN: During Starbucks’ life, there’s been an increasing proliferation of neighborhood coffeehouses. How much do you think about these hyper-local cafes as your competition? I was watching your new commercial, “That’s not my name.” And it ends with a tweaked name for you guys, a Starbucks Coffee Company, which sounds a little more local. Is that what you’re trying to signify?

NICCOL: The reality is, Starbucks started as a coffee company, and at the heart, that’s what we are. Again, I went back and did a little history lesson, and when Starbucks first started, it had a very simple statement to be the purveyor of the finest coffee in the world.

And we still believe that in a really big way. So I think it’s important to make that statement that we are the Starbucks Coffee Company. And what I want people to understand is we are so committed to coffee quality that we apply that same commitment of quality and craft to the food we do, the teas we might provide, but first and foremost, we’re a coffee company. And I think it’s important for people to be reintroduced to Starbucks from that point of view because I think we’ve forgotten to tell people that over the last, let’s call it last decade.

SAFIAN: I mean, it sounds like you need to focus more. Now you need to narrow down a little bit what you’re doing, get a little more streamlined. And then maybe once that is aligned, you could start adding things back again or adding new things.

NICCOL: We’re going to continue to be an innovative company, but you’re best served to innovate when your core is strong. If you are innovating to try and compensate for a weak core, usually good things don’t happen. You end up just drifting. And my point is let’s have a strong, healthy core, and then we can innovate from there.

Copy LinkTranslating lessons from Chipotle to Starbucks

SAFIAN: How much of this is an echo of you applying the lessons that you applied at Chipotle, or is every retail brand different, and like, you can’t necessarily translate across quite that way?

NICCOL: I started my career at Procter & Gamble, and one of the things that was kind of just a fortunate blessing is I had the opportunity to work on multiple brands early in my career. And I remember one of my managers early on said, “Hey, look, when you shift brands, one of the first things you gotta find out is why do people love that brand?”

And once you understand why people love that brand, drive that point. Then you also have to understand, well, what is it that I provide that enables me to make money? Once you kind of understand what makes your brand special and how you are able to get the right economics for what you’re providing, that’s what you have to hold onto.

And I’ve taken that approach to all the businesses that I’ve had the good fortune to be a part of or had the opportunity to lead.

I was at a place in Chipotle where — again, great brand, great product — we just drifted a little bit. We got the brand back on track. We got operations in order, and our people became empowered. I think similarly, we can have those principles apply. Obviously, we’re going to do it in a little different way. This is coffee and the romance of coffee, which has a little, I think, different appeal than what I was doing before.

SAFIAN: The Starbucks role also has a different kind of spotlight on it than Chipotle. I mean, already there’ve been media stories about your private travel and about your compensation. How different is that kind of thing than what you saw at Chipotle?

NICCOL: It’s wildly different. I probably underestimated how much people would be interested in what I’m up to. I was excited to have the opportunity to work on a global iconic brand and hopefully make a big difference. The good news is people care a lot about this business. A lot of people use the brand.

And so, therefore, they have an opinion on what’s going on. And I was definitely surprised by how much coverage and all the different stories that pop up. But at the end of the day, you know what? I’d prefer people caring than not caring.

SAFIAN: And you’re not going to move the headquarters to Southern California.

NICCOL: No, I don’t have any plans to do that.

SAFIAN: Brian may not have fully expected the spotlight he’s under, but he seems to be managing okay. You can tell why the Chipotle team responded to him and why, at least so far, Starbucks seems to be showing new energy. Next up, Brian shares his plans for making Starbucks ‘the best job in retail.’ Plus, he unpacks his unsolved problems with mobile ordering and more. Stay with us.

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SAFIAN: Before the break, Starbucks CEO Brian Niccol explained his back-to-Starbucks strategy for recapturing brand magic. Now, Brian talks about Starbucks’ biggest challenges ahead, from competition in China to workforce disaffection in the U.S. to the conundrum of mobile ordering. Plus, how Starbucks is deploying AI across the business. Let’s jump back in.

Copy LinkA global ‘regrounding’ for the brand

China’s been a major market for Starbucks, only recently passed there by a local competitor, Luckin Coffee. With ‘Back to Starbucks,’ are you shifting attention away from Asia, or is that a fight you still want to win?

NICCOL: Yeah, no, look, the whole back-to-Starbucks strategy is more about a regrounding of the brand globally. I just did a trip to Tokyo, Seoul, and Shanghai, and the back-to-Starbucks strategy applies. Now, there is definitely localization that needs to take place in both menu, pricing architecture, product, and food innovation, but the fundamentals of a moment of connection, a great third place, a barista that’s engaged and demonstrates caring applies.

Frankly, I think there are some things the U.S. business can learn from what we’re doing in these other markets.

Some of these places are ahead of the U.S. business on being.

SAFIAN: I was curious whether you saw a similar kind of disconnecting in those global stories that you saw and have seen in the U.S., or whether it didn’t quite drift as much there.

NICCOL: Mobile ordering is just not nearly as prevalent in the business as I’ve seen in the U.S. With the exception, China’s got a pretty developed digital business, but like in Italy, Japan, Korea, not as much, although it’s developing.

But they’ve done a nice job of keeping the channels separated so that they aren’t competing and creating a conflict.

Unlike in the U.S., we really didn’t do a great job of keeping those businesses orderly and separated.

SAFIAN: Yeah, technology is a great tool and helps make things easier for employees and customers, but it doesn’t always make things less complicated.

NICCOL: Yeah. Well said.

Copy LinkCreating ‘the best job in retail’

SAFIAN: Yeah. Starbucks has seen a bunch of unionizing in the U.S. in recent years, 10,000 some employees. How focused are you on addressing pain points for the Starbucks team versus the customers?

NICCOL: I want to have the best job in retail. I believe we have the best job in retail. And when you look at the career opportunity, it’s the best job in retail. When you look at the wage, again, the best job in retail. Benefits, the best job in retail. And even if you’re a part-time partner, we surround you with the best benefits and wage. Again, we’ve made great progress on scheduling, and I think we’re going to make even better progress on developing people so they can develop their careers with us. I most recently just introduced a desire to have 90 percent promotion from within.

I also discovered I think it’s like 65 percent of our store managers are women, and they’re kind of in their 30s. And one of the things that came back through some emails from folks was, “Hey, it’d be helpful if I could get longer parental leave.” And I took a look at it, and you know what? They were right. We needed to provide longer parental leave if we wanted to have these people be able to stay with us and grow with us. And so, we just added that benefit. I am passionate about the idea of setting our partners up for success, putting them in the best job in retail. And I think we’re starting to see progress.

Our turnover is, I think, the lowest in the industry, down to 50-some-odd percent. And like I said, now our goal is not only to retain people but to promote people.

SAFIAN: I’ve had several conversations over the years with Danny Meyer, the restaurateur and co-founder of Shake Shack, about how hard it is for employees to build a career in retail and hospitality, except at the very top of the companies. Even as you’re saying, “Oh, it’s great that turnover is only 50 percent,” but 50 percent turnover is still replacing and bringing a lot of new people through all the time.

NICCOL: Yeah. But I mean, look, relative to the industry, I think the industry is over a hundred the last time I looked, so we’re making nice progress. And when you become a store manager, that drops dramatically. A district manager drops even more. So, to your point, as you move out of the, call it, everyday, facing customer roles where you join us as a Green Apron partner, I think we are providing great opportunities for those individuals. What I’d love to have happen is to move them into the store manager role so that the next thing you know, they’re contemplating being a district manager. And the good news is we’ve got the growth where we’re going to need the people.

So, I’d rather the growth happen for our own people than having to go external.

Copy LinkLessons from working as a barista

SAFIAN: When you started at Chipotle, if I remember this right, you trained on the burrito line, right? Do I remember that right? Have you taken time yet to experience the barista lifestyle?

NICCOL: I have. I’m definitely not going to win the barista championship by any means, but I definitely understand what the job is.

SAFIAN: Are there specific things that you learned from going through that experience?

NICCOL: That’s where I first heard about the desire to bring back the condiment bar. I was talking to some of our partners, and they were like, “brewed coffee is a real pain.” “Wait, say more about that. Like, I see the equipment. What’s the issue?” And they’re like, “Well, we have to kind of guess at cream and sugar for our guests.” And I was like, “Oh, okay.” And our customer was kind of one of those deals where they’re like, “Why is my brewed cup of coffee going down the line? Why don’t you just hand it to me? I want to put in my own cream and sugar.” And so, this is one of those classic hangovers from COVID where we just never went back and put it back in place because I think we lost focus on the customer experience. And in this case, we also lost focus on what makes the partner experience better.

Copy LinkAligning business practices with brand values

SAFIAN: A lot of CEOs come out of finance or sales. You come from a marketing-centric background. And I know at Chipotle, you talked about how consumers increasingly care about the brands that align with their values.

How important are values to the Starbucks brand?

And the issue of opening bathrooms up to people who aren’t customers, I mean, that was something that was kind of interpreted or explained through the lens of values, was it not?

NICCOL: I think it’s like, hey, we got to be practical, and what was practical is, this is another great example where I was spending some time in the stores with our partners. And I’m like, “Hey, why does your store not have any furniture?”

And they’re like, “Well, we took out the furniture because, frankly, we were letting everybody in here. They weren’t respecting our customers and our other baristas, and frankly, they’re abusing the space.”

This is first and foremost a place for our customers. The thing that kind of broke my heart in this was you hear partners saying, “Hey, I don’t feel safe. I hate what is happening in my cafe.”

But meanwhile, right across the street is a coffeehouse with furniture and having a great experience. We’re going to use, I think, practical practices to ensure we have a great, safe space for customers and partners, and that’s what we stand for.

Copy LinkIntegrating AI to enhance operations

SAFIAN: I realized that I have gone through this long and I haven’t asked you yet about AI, which is like a record. It’s a necessary question these days. I know Starbucks is developing an AI philosophy. Can you share what you’re doing, how we might see AI applied?

NICCOL: Yeah, look, a lot of it is behind the scenes to help us with forecasting. These large language models really present an interesting opportunity for us, especially as it relates to the sequencing of orders and mobile ordering, and then also how we deploy and execute in the stores, as well as maintenance as it relates to keeping our equipment up and running and ready to go, right?

We can start to implement these things, so it knows that the mastrain is going to have a problem. The mastrain is our espresso machine.

If the espresso machine goes down, we’re out of business versus I’d rather have kind of leading indicators that tell us, hey, this is getting wobbly.

You might want to jump in and fix it. That’s how we’re starting to use it. It also has nice implications for the user experience as it relates to the app. It’s also a great resource potentially for training and helping people navigate unexpected events, right?

Like, make it up, you’re supposed to have nine people, but only eight people show up today. What’s the best way to deploy now? It’s really a co-pilot, if you will, is how I see us using it.

SAFIAN: But not particularly customer-facing. That engagement, you want to keep human?

NICCOL: Correct. Yeah, correct.

Copy LinkBrian Niccol’s approach to joining the company as an outsider

SAFIAN: When you come in as an outsider to a company where you haven’t worked before and you have to demonstrate your leadership, how do you make those connections across the organization? I know you said you’ve done some travel, but what is meaningful? What things do you feel have worked? Have you tried any things that haven’t worked?

NICCOL: Yeah, look, the experience I’ve taken is to be more of a listener initially, and then, be transparent on your decisions, and that has served me well. Then also, make sure you’re bringing people along with you on those decisions, right? So, give them the why as much as what you would like to do. And what I have found is if you’re committed to listening and learning, and then you use that as a way to inform the decisions that you make, and people understand where the decisions are coming from, you can bring along people. You’re not going to be able to convince everybody, and I’ve just had to accept that’s how this works, but I think I can bring along the people that want to be all in.

And the other places that ultimately don’t believe in you or don’t believe in what’s going on, usually they find their way to another opportunity.

Copy LinkTackling the mobile order conundrum

SAFIAN: You make it all sound so logical and simple. I mean, all of the changes that you’re making, it sounds like it’s simple, straightforward. What’s been hard about it, or has it been pretty straightforward for you because you knew what you wanted to address?

NICCOL: Look, I do believe in organizations of this size and our scale. You have to keep it simple so that people can repeat it, buy into it, and then teach it, right? It’s like I see people teaching how we’re going to clean up the mobile ordering bottleneck that we have, right? Make no mistake, these aren’t easy things to solve. Specifically, the mobile ordering conundrum that we have where it’s all first in, first out. But the thing that I love is we’ve simplified the problem we’re trying to solve.

And the problem we’re trying to solve is we have to bring order to mobile orders so that we can have a great cafe experience and a great drive-thru experience.

How we’re going to do that? We’re going to deliver a four-minute experience in the cafe, and we’re going to make sure that we don’t get past 12 to 15 minutes in mobile order because we know that’s when people abandon. Now, how you actually pull that off is not as simple as what I just said. But knowing what the objective is, I think, is 99 percent of the battle.

SAFIAN: And the fact that you’re not sure exactly what the answer is yet, it’s not necessarily up to you to solve the problem. It’s to create an environment where others are attacking the problem.

NICCOL: Yeah, that’s exactly right. Like, I’m not going to be the one to solve how we get to the four minutes, bringing order to mobile orders. But what I can share with people is like, this is why this is the right thing to do for the business, and this is why we will be successful if we can capture that outcome.

SAFIAN: And I guess the hard things that will come to you maybe are like the trade-offs that may be required to be able to reach that.

NICCOL: That’s right. It’s like, hey, you may need to discontinue some items. We may need to, in some cases, change the way people order digitally. Like, now you may have to pick what time you want your beverage, as opposed to right now it’s you order, and we spit back, “Hey, that beverage will be ready in three to five minutes.” We may have to flip that where it’s like you select, “Hey, I’ll pick up my coffee at 8 a.m.”

SAFIAN: There’s a window that you pick where you get.

NICCOL: That’s right. You would be like, I’ll get my coffee between 0-5. Great. Now we can cue that into the system, and we can take care of our in-store customers. We know how many typically we get, mobile orders, and how many we can allow into that five-minute slot.

It’s like a new choreography for the store.

I think if we can reliably deliver for people roughly a four-minute experience in-store, then you will reliably come to the store. The challenge we have right now is you don’t know what you’re going to get when you come into our store, partly because we have no control over how many mobile orders are coming in, when, and how many. And so that really can get things really big in a bottleneck situation that creates a lot of pressure on our partners to try and just get drinks out the door as opposed to creating drinks with connections.

SAFIAN: And if that means that as a mobile order, I have to wait a little longer, like I can’t just know that I can get it whenever I want in the next three to five minutes, that just may be a trade-off that has to happen.

NICCOL: That might be the trade-off that has to happen. That’s exactly right. And look, one of the things I know is, on average, our drinks are sitting on the counter six to eight minutes already. So it’s like I’m providing you drinks in three to four minutes, and people aren’t showing up for another four minutes.

SAFIAN: That’s just waste.

NICCOL: It’s just waste. And also, you end up with not the best product either.

SAFIAN: Right. Because it’s been sitting there.

NICCOL: It’s been sitting there. And then usually what happens is you ask our barista to remake it. And it’s just a vicious kind of circle. But you hit the nail on the head. That’s exactly right.

Copy LinkWhat’s at stake for Starbucks right now?

SAFIAN: Given all this, what do you feel is at stake for Starbucks right now?

NICCOL: Yeah, look, I think the whole kind of integrity or soul of Starbucks is at stake if I can’t get mobile ordering to balance with the in-store experience.

We are having to reintroduce the brand to people. I don’t know if you’ve seen the most recent ads that we’ve put out there, but it’s this whole idea of “hello again, let us reintroduce you to the Starbucks business and what the Starbucks Coffee Company is all about.”

And you’re going to see us continuing to do that. And we got to change the conversation of what the Starbucks Coffee Company stands for. If people just call us a corporation, I’m not doing my job.

And we’re going to use marketing to do that. And we’re going to use experiences in the store to do that.

SAFIAN: Well, Brian, this has been great. Thanks so much for doing it, for taking the time. I really appreciate it.

NICCOL: Yeah, likewise. Great meeting you, and great spending some time talking with you.

SAFIAN: I’d never talked to Brian before this, and I have to say: I liked him. His confidence, calmness, and clarity of direction feel like a good fit for Starbucks’ needs. I keep returning to his focus on the details rather than on grand sweeping statements, and it’s a great reminder that excellence and success are, at the end of the day, in the details. That doesn’t mean Brian doesn’t have grand aspirations for Starbucks. But every business needs a solid foundation to grow from. He seems to acknowledge that, for Starbucks, that foundation is more about the experience and the brand than it is about the coffee — even as he talks up the Starbucks Coffee Company. It’s a deft dance: looking up ahead at the horizon while also keeping a close eye on what’s directly beneath your feet. But that’s what leadership requires. In a world where so much changes so fast, we all have to remind ourselves where the solid ground is for us, and then build from there.

I’m Bob Safian. Thanks for listening.