Why Starbucks is losing sales and what it's doing about it

You know things are rough at Starbucks when the company drops bad news in advance, which had to get in before Wednesday's deadline to report earnings last week.

Sales in the U.S. have been down for months, Last quarter fell 6% Compared to a year ago, that made it the worst quarter since the pandemic-era shutdown. The number of purchases decreased by 10%.

The chain's new CEO is now ordering a turnaround: a plan he's calling “Back to Starbucks,” evoking a time when Starbucks was simple, cheap, comfortable, cool — and prosperous.

“We had to fundamentally change our recent strategy,” said CEO Brian Nicol A video address About two months of employment. He mentioned plans to “simplify our overly complex menu,” adding: “We must re-establish ourselves as a community coffeehouse.”

In the absence of more specifics, speculation is running rampant online: Will cafes get plush couches? Will Starbucks denigrate syrups, toppings and endlessly customizable drinks as “frankendrinks”? Will it reopen its spice bar, where people poured their own milk and sweets before the pandemic?

A company representative told NPR that the CEO's plans are still being developed Some details may emerge on Wednesday, as Nicol takes questions from investors for the first time.

Too fancy to be basic, too basic to be fancy

Two women with paper coffee cups chat at a table near an airy, new Starbucks in Bethesda, Md., a suburb of Washington. On closer inspection the cups are available from another cafe a block away.

“We're just here for the sun,” said one woman, Tamar King. “It's a park.”

In fact, this Starbucks is outfitted with rivals: This busy downtown stretch counts 11 coffee spots within a two-block radius. That includes the usual suspects Dunkin' and Panera, trendy options Tat's Bakery and Ceremony Coffee Roasters, and even another Starbucks. Such competition has not used to threaten the coffee giant, but it has intensified.

Also, there is another battlefield. The company that hooked America on coffee now competes not only against other cafes, but also against all the fancy coffee makers people have at home or at work.

That means Starbucks is stuck in the middle: too fancy to be basic, too basic to be fancy.

“I used to go [to Starbucks] Every day for years,” King said. What's changed? “The office I work in has a fantastic coffee machine. Fantastic.”

Niccol sometimes talks about losing Starbucks customers. But once-loyal viewers are also in line.

“We've loved it for years,” said Lisa Janofsky, who came to a Bethesda Starbucks with her husband, Jerry, to cash in on her rewards card: a free Venti Skim latte as her birthday present.

They went to Starbucks every day. But now they flock to gourmet coffee shops for a “community feel” and superior coffee taste. Lattes are made at home every day for about $1 a cup, they estimate.

“We have a wonderful machine at home that we use,” says Jerry Janofsky. “And my wife is a great barista, she designs for me.”

On the wish list: good beans, cheap drinks, latte art

Lisa Janofsky said if Starbucks beans were under-roasted, size options included a short latte with just one shot of espresso, and if baristas were doing latte art.

At the speed of Starbucks, it's hard to imagine the possibility of baristas creating designs over milk froth, especially during the morning rush hour. Mobile orders are often backlogged, stores are crowded, staff are overwhelmed.

“We need to address staffing in our stores, remove barriers and make things easier for our baristas,” said Nickle, the new CEO. “We need to refine mobile ordering and payment, so it doesn't overwhelm the cafe experience.”

Starbucks is literally betting big on nickels. The coffee company lured him away from Chipotle, which he later credits with a reboot Foodborne-illness outbreaks. At Coffee Giant, he can earn One of the biggest paychecks in the industry — more than $100 million — if he succeeds in turning it around.

Its challenges are many.

Several shoppers in Bethesda expressed their disappointment that Starbucks Still fighting Its unionized shops. The chain has lost its footing in China. it is Facing boycott in the Middle East and Asia over the company's perceived support of Israel's conflict with Gaza. A Maryland woman says two dozen people she knows in the U.S. have also stopped going to Starbucks.

And the biggest complaint so far?

“It's very expensive,” said Angeli Smith, who regularly works from Starbucks Cafe and met a friend for a pumpkin cream cold brew on this day. “I mostly use my gift cards for birthdays and graduations.”

Nicoll will likely be asked about his pricing plan on Wednesday, when he speaks to investors. He has so far spoken only in vague terms, promising to “fix our pricing architecture and ensure that every customer feels valued every time they visit Starbucks.”