SEATTLE — A priority for Brian Niccol, the new chief executive officer of Starbucks Corp., is simplification — simplify beverage customization, simplify the food menu, simplify pricing and simplify the company’s app. One thing he said he has learned since stepping into the role on Sept. 9 is Starbucks has become too complicated for some people.

“Right now, if you go through the app, you’ll notice that we offer up all kinds of customization, or it’s the same customization page for almost everything that you order,” he said during an Oct. 30 conference call with securities analysts to discuss fourth-quarter results. “Two things happen. One, it’s complicated for the customer to get through it. And then two, we kind of incentivize people to customize drinks that probably aren’t the best way to execute the drink. Not to mention it creates additional complexity for our partners to execute the drink.”

That unnecessary customization also raises the price of the product, which may prompt consumers to go elsewhere.

“What I have found is when you get simplification in place on pricing, people understand, okay, this is what I’m paying and this is what I’m getting,” Niccol said. “And right now, I think we’re surprising people a little bit on what they’re paying through the customization process, and we’ve got to fix that.”

He emphasized that it is still early in his tenure and that the company is still working on the specifics of what will be simplified and when, but Niccol did add that it will impact both Starbucks’ beverage and food menu.

“… There’s definitely room for us, I think, to eliminate some products, frankly, that add complexity, have a lot of waste and really don’t add a whole lot to the experience,” he said.

Starbucks’ performance during the fourth quarter of fiscal 2024 underscores the challenges Niccol has been brought in to help the company recover from. For the period ended Sept. 29, the company recorded net income of $909 million, equal to 80¢ per share on the common stock, and down 25% from the same period of the previous year when net income was $1.22 billion, or $1.06 per share.

Quarterly sales fell 3% to $7.44 billion from $7.68 billion the year before.

Even more alarming for the company was in its North America segment, where comparable store sales fell 6% and the number of transactions fell 10%.

Offering fewer customization options through mobile ordering is seen as one way to improve Starbucks' business.
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“Traffic declined across all channels and day parts, with the most pronounced decline in the afternoon day part,” said Rachel Ruggeri, chief financial officer. “In addition to the continued decline of non-Starbucks Rewards (SR) member visits, frequency also slowed across all SR member deciles in comparison to prior year and ultimately impacted spend.”

It wasn’t much better in the International segment, with comparable store sales falling 9% and the change in transactions falling 4%.

“Our financial results were very disappointing, and it is clear we need to fundamentally change our strategy to win back customers and return to growth,” Niccol said.

Another area of complexity Niccol plans to address is balancing mobile orders with in-store and drive-thru demand.

“Today more than 30% of transactions are driven by mobile orders,” he said. “At peak it can drive an influx of orders that can be difficult to sequence and quickly deliver to our customers. When it works well, it’s great, but sometimes it can be a challenge for both customers and partners.

“So, we’re working to improve sequencing with a new algorithm that enables on time mobile order handoffs and supports our four-minute throughput with quality being our goal for cafe customers. And over the coming months, we plan to take steps to better separate mobile order pickup from the cafe experience.”

For the full year, Starbucks earned $3.76 billion, equal to $3.31 per share, and down 9% from fiscal 2023 when the company earned $4.12 billion, or $3.58 per share.

Fiscal 2024 sales were $36.18 billion, up less than 1% over the previous year when sales were $35.98 billion.

Starbucks did not provide financial guidance for fiscal 2025.