Capstone Research Paper
Brian Niccol's Leadership: A Wake-Up Call or Sleeping Pill for Starbucks' Future Growth.
10 min read
AboutI recently worked on a Business Paper on Operational Excellence along with Kunal Pundir and Parnika Jonnalagadda, under Prof. Shannon Petitford at Northeastern University, Boston.
The research paper revolves around identifying the problems leading to the recent declining sales at Starbucks.
The Backstory"This quarter’s 7% decline in same-store sales was the company’s steepest drop since the Covid-19 pandemic.” - (CNBC, 2024)
Scanning the timeframe from October 2022 to April 2023, when the decisions at Starbucks were led by then-CEO Laxman Narasimhan, a strategy to step up into the digital race, eventually led to the exit of Starbucks’s American Indian CEO.
”Who is Laxman Narasimhan and why Starbucks fired its CEO after a year?” - (Business Standard, 2024)
As stated in (American Bazaar Online, 2024) “A key factor in Narasimhan’s departure is the financial underperformance of Starbucks during his leadership. The company reported a 3 % drop in global sales in the quarter ending June 2023, with a further 4 percent decline in the subsequent quarter.”
The Backstory"This quarter’s 7% decline in same-store sales was the company’s steepest drop since the Covid-19 pandemic..”
- (CNBC, 2024)
Scanning the timeframe from October 2022 to April 2023, when the decisions at Starbucks were led by then-CEO Laxman Narasimhan, a strategy to step up into the digital race, eventually led to the exit of Starbucks’s American Indian CEO.
”Who is Laxman Narasimhan and why Starbucks fired its CEO after a year?” - Business Standard 2024
As stated in (American Bazaar Online, 2024) “A key factor in Narasimhan’s departure is the financial underperformance of Starbucks during his leadership. The company reported a 3 % drop in global sales in the quarter ending June 2023, with a further 4 percent decline in the subsequent quarter.”
The ProblemPoorly Managed Staffing
This staffing shortage is particularly problematic given the cafe’s consistently busy throughout the day.”The store, situated near major roads and shopping centers, typically operates with just three staff members outside of peak morning hours.
Mobile Orders
Baristas struggle to balance mobile and in-store orders, leading to delays for both groups.
“I recently worked on a Business Paper on Operational Excellence along with Kunal Pundir and Parnika Jonnalagadda, under the guidance of Prof. Shannon Petitford at Northeastern University, boston, while studying Advanced Business Processing.
This paper revolves around identifying the problems leading to the recent declining sales at Starbucks.”
The Backstory
Scanning the timeframe from October 2022 to April 2023, when the decisions at Starbucks were led by then-CEO Laxman Narasimhan, a strategy to step up into the digital race that had a promising start eventually led to the exit of Starbucks’s American Indian CEO.
As stated in (American Bazaar Online, 2024) “A key factor in Narasimhan’s departure is the financial underperformance of Starbucks during his leadership. The company reported a 3 % drop in global sales in the quarter ending June 2023, with a further 4 percent decline in the subsequent quarter.”
Problem Identification and Underlying Causes
Mobile Application’s Order-Ahead Functionality: As stated in (Bizz Tech Weekly, 2024) “According to recent reports, Starbucks, the global coffee chain giant, is grappling with significant challenges in managing its mobile ordering system and addressing staffing concerns. The company’s popular mobile ordering platform, designed to streamline the customer experience, has inadvertently created difficulties for store employees to manage efficiently.”
Poorly Managed Staffing: As stated in (Bizz Tech Weekly, 2024) “At a Starbucks location in North Carolina, an employee revealed that understaffing is the primary issue affecting service quality. The store, situated near major roads and shopping centers, typically operates with just three staff members outside of peak morning hours. This staffing shortage is particularly problematic given the cafe’s consistently busy dining room throughout the day.”
The New Moves from Brain Niccol
1. The new CEO started his move by reducing promotional offers on mobile app to get the users to pay the full prices for coffees and tea. As mentioned in (CNN, 2024) “The move is part of new CEO Brian Niccol’s strategy to reposition Starbucks as a premium brand while also reducing the strain on employees, who get flooded with work when promotions are high”
This ensures that the instore working staff doesnt get overloaded with work and the employee happiness index remains intact.
2. The company in September offered extra loyalty points on Tuesdays and deals on several drink purchases on Saturdays. This was a shift from deeper discounts that spanned many months earlier this year, like “buy one, get one free” and 50% off.
The earlier promotions were more generous and lasted for longer periods, whereas the newer offers are more targeted and limited in scope, focusing on specific days and loyalty incentives instead of broad, deep discounts. This likely reflects a more controlled or strategic approach to promotions.
3. Niccol wants to make Starbucks (SBUX) a coffee shop again, not just an online-driven business.
4. Niccol said in a letter last month to employees and customers that he wants to return Starbucks to its roots as a “community coffeehouse” with comfortable seats, improved design and a clear distinction between “to-go” and “for-here” service.
5. “There’s a shared sense that we have drifted from our core,” he said. “We’re committed to elevating the in-store experience — ensuring our spaces reflect the sights, smells and sounds that define Starbucks.”As stated in (American Bazaar Online, 2024) “A key factor in Narasimhan’s departure is the financial underperformance of Starbucks during his leadership. The company reported a 3 % drop in global sales in the quarter ending June 2023, with a further 4 percent decline in the subsequent quarter.”