One of the first changes Brian Niccol is making in his new tenure as CEO of Starbucks is to back away from the coffee chain’s short-lived discounting strategy and return to the Seattle-based chain’s positioning as a premium brand, as first reported by the Wall Street Journal.
Former Starbucks CEO Laxman Narasimhan announced the company’s first-ever combo meals in June following disappointing second quarter results in an attempt to attract cash-strapped customers back to the brand. The first promotion was the limited-time pairings menu, which combined a savory breakfast item with a tea or coffee for $5 or $6, and was followed by extra loyalty points on Tuesdays and other deals on Saturdays.
With Narasimhan gone, the plan to expand Starbucks’ discounting has been abandoned and the company has quietly scaled back on its flurry of promotional activity. Starbucks is not planning to run offers during the holiday season and will instead promote new and returning beverages via a robust advertising strategy, the company said in an October meeting with store leaders.
Since making the high-profile move from Chipotle CEO to head of Starbucks, Niccol has quietly returning the company back to pre-Narasimhan strategies and largely erasing many of the recent changes made. For example, the company has seemingly gotten rid of the position of global chief merchant and product officer. The role was created under Narasimhan’s leadership and responsibilities included product development, consumer insights, and data science.
“The strategy is, simply put, just making a couple powerful choices, and then we’ve got to execute like crazy,” Niccol said during an internal company forum in September, as viewed by the Wall Street Journal. He added that any changes made must make the brand better and be thoughtfully communicated to employees.
Last month, Niccol said he would prioritize “refocusing” the Starbucks brand, which had “drifted from its core,” of being a “welcoming coffeehouse.” Ditching the recent discounts would certainly be in line with this strategy, as unlike many of its quick-service colleagues in the industry, Starbucks had never been known for offering promotions or bundles, even when consumer spending is down. Niccol also said in his September letter that “not letting others define who we are” is paramount to Starbucks’ differentiation, which would include not only discounting but the company’s recent forays into menu trends spearheaded by growing competitors like Dutch Bros and 7 Brew.
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