Starbucks CEO Brian Niccol is here to put the brand back on top
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The phase we're in is we got to get things turned around. We got 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 got to change the conversation of what the Starbucks coffee company stands for. You know, if people just call us a corporation, I'm not doing my job. And, you know, we're going to use marketing to do that. And we're going to use experiences in the store to do that. That's Brian Nickel, 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 a 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. ♪

I'm Bob Safian. I'm here with Brian Nichols, CEO of Starbucks. Brian, thanks for joining us. Yeah, great to be here, Bob. So 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?

My caffeine intake has definitely gone up since I took this job, but I love the energy of the turnaround. And, you know, look, the coffee's pretty darn good too. 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? 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 that 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-

You know, there's a little smiley face on your cup and it just changes the entire attitude of the customer. And, you know, obviously you got to have a great product. You got to have a great experience. But if you have those little moments of connection, it just adds so much more.

Yeah, well, it's always interesting how in, you know, food-related businesses, like, of course, the product has to be satisfying. But so much of it is about the experience, about getting the experience to feel memorable, satisfying.

Yeah, that's right. And, you know, 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, yeah.

You know, I'm sure Bob, like me, I remember when the first Starbucks kind of came to my neighborhood and it was a moment for our neighborhood, right? I was living in Cincinnati, Ohio. I was working at Procter & Gamble at the time. And we were like, hey, what a great spot. I also really loved it when they were like, all right, Brian, you know, grande americana 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, you know, we started looking at how you can remove seconds from the proposition as opposed to how do you maintain a

the experience and the connection and the integrity of what goes even beyond a great cup of coffee. There is this kind of impression that there was like an earlier Starbucks heyday, but it's not like the stock is that far from its all-time high. So like,

When you think of the sort of the life cycle of the company, what phase do you feel like it's in or like do you see phases ahead? Yeah, look, I think right now the phase we're in is we got to get things turned around, at least in a U.S. business. We got to get what I would call the soul of the business back and this connection back and the partner experience back so that the customer feels safe.

the brand again. Okay. And I think when we get that back, there's tremendous growth in front of us because frankly, the reality is so many things kind of isolate you as opposed to,

bring you together. I think people want to get out of the loneliness phase and get back to the connection phase. And I've had the opportunity to travel around the world and it's true everywhere I've been, you know, whether it was Italy, which was also a little bit surreal because, you know, the whole Starbucks original idea came from Howard visiting Italy. And here I am back in like Milan, seeing people walk around with Starbucks cups. And it just demonstrates this is one of those human truths that just

people all around the world. You know, connecting over a cup of coffee or connecting with your barista, it's just a human truth. You mentioned Howard Schultz, the founder and multiple-time CEO there. Do you talk with him about what you're doing or is it kind of you're on your own? Howard's been great. You know, I think on

I'm fortunate that you still have a founder that can share the history of how Starbucks went from, you know, the one store in Seattle to the iconic global brand that it is. You know, he doesn't want to run the company. He doesn't want to be involved in the day-to-day. He wants me to do that. But he's available for me to say, hey, I'm just curious, why did we do this? You know, what was your 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. - I mean, it sounds like you're sort of systematically going at these pain points for customers and resolving them and sort of making them work the way, maybe the way they used to, shorter wait times, more welcoming in-store environments.

One of the big pain points that is kind of tough, like rising prices, you don't control inflation. Proposed tariffs would hit coffee imports. Are there things that you can do if you don't want to pass price increases along? Like, are there things that you and your team are preparing for with the prospect of these tariffs coming?

I think there are opportunities for us to eliminate costs that don't add value to either 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

that we have growth that can help offset some of this challenge too. Where I think sometimes businesses get in trouble, and I think Starbucks might've gotten a little bit of this trouble is they went after cost at the expense of the experience. And, you know,

That's where then you start to tread on, are you ruining what the brand stands for, what the brand promises and what the brand can deliver? And so we just got 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. During Starbucks' life, there's been an increasing proliferation of neighborhood coffee houses. How much do you think about these hyper-local cafes, adverts,

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 bit more local. Is that what you're trying to signify?

The reality is Starbucks started out as a coffee company. And at the heart, that's what we are. Like, 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 the coffee quality that if we apply that same commitment of quality and craft to the food that we do, the teas that we might provide, I think that just travels. 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, you know, let's call it last decade.

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 bit more streamlined. And then maybe once that is sort of aligned, then you could start adding things back again or adding new things. We're going to continue to be an innovative company, but it's just 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 like, let's have a strong, healthy core and then we can innovate from there. How much of this is an echo of, you know, you applying the lessons that you apply to Chipotle or is every retail brand different and like you can't necessarily translate across quite that way?

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, you know, I remember one of my managers early on said, hey, look, when you shift brands, one of the first things you got to 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 got to hold on to. 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 set up 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. Big success. You know, I think similarly, we can have those principles apply. Obviously, we're going to do it in a little different way. This is, you know, coffee and the romance of coffee, which has got a little, I think, different appeal than what I was doing before.

The Starbucks roll also has a different kind of spotlight on it than Chipotle. I mean, already there have been media stories about your private travel and about your compensation. Like, how different is that kind of thing than what you saw at Chipotle? It's wildly different. You know, 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 make hopefully 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, you know, 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. And you're not going to move the headquarters to Southern California? No, I don't have any plans to do that.

Brian may not have fully expected the spotlight he's under, but he seems to be managing okay. And 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, quote, the best job in retail. Plus, he unpacks his unsolved problems with mobile ordering and more. Stay with us.

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Before the break, Starbucks CEO Brian Nickell 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.

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? 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, look, 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 what Starbucks should be. Yeah, I was curious whether you saw a similar kind of disconnecting in those global stores that you saw and have seen in the U.S. or whether it didn't quite drift as much there.

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. Yeah.

Yeah, technology is a great tool and helps make things easier for employees and customers, but it doesn't always make things less complicated. Yeah, well said. I might have a job available for you. 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? I want to have the best job in retail. And 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, best job in retail. Benefits, best job in retail. And even if you're a part-time partner, you're

We surround you with the best benefits and wage again. And, you know, 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% promote within. I also discovered, I think it's like 65% of our store managers are women and they're kind of in their 30s. And, you know, 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, right?

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. So, you know, I am passionate about the idea of setting our partners up for success, putting them in the best job in retail. And I think, you know, look, 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 promote people. 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. And even as you're saying, like, oh, it's great that turnover is only 50%, but 50% turnover is still bringing a lot of new people through all the time.

Yeah. But I mean, look, relative to the industry, I think the industry is over 100 last time I looked. So, you know, we're making nice progress. And when you become like a store manager, that drops dramatically. A district manager drops even more. So to your point, as you move out of the call it the everyday facing customer roles where you join us as a Green Apron partner, right?

And I think we are providing great opportunities for those individuals. What I'd love to have happen is how do we move them into the store manager role so that, you know, 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 happened for our own people than having to go external. When you started 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? I have. I'm definitely not going to win the barista championship by any means, but I definitely understand what the job is. Are

Are there specific things that you learned from going through that experience? 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. And I'm like, wait, say more about that. Like,

I see the equipment. What's the issue? And they're like, well, you know, we got to kind of guess at cream and sugar for our guests. 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 green?

Going down the line, why don't you just hand it to me? I want to go 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.

A lot of CEOs come out of finance or out of 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? I think it's like, hey, we got to be practical. You know, and what was practical is this is another great example where I was, you know, 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, you know, frankly, we were letting everybody in here and

They weren't respecting our customers, 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 coffee house with furniture and having a great experience. We're going to use coffee.

I think practical practices to ensure we have a great, safe space for customers, partners, and that's what we stand for. I realize that I have gone through this long and I haven't asked you yet about AI, which is like a record. It's like 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?

Yeah, look, a lot of it is behind the scenes to help us with like forecasting. These large language models really present an interesting opportunity for us as it relates to especially 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 mistrain is going to have a problem. The mistrain 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 like

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. But not particularly customer facing. That engagement you want to keep human. Correct. Yeah, correct.

When you come in as an outsider to a company where you haven't worked before and you have to, I don't know, demonstrate your leadership, how do you make those connections across the organization? I know you said you've done some travel, but like what is meaningful? What things you feel like have worked? Have you tried any things that haven't worked? Yeah, look, the experience I've taken is be more of a listener initially and then, you

you know what, be transparent on your decisions. And that has served me well. And 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 – you're 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, you know, the other places that ultimately don't believe in you or don't believe in what's going on, you know, usually they find their way to another opportunity. You make it all sound so logical and simple. I mean, all of the changes that you're making, you know, it sounds like it's simple, straightforward. What?

What's been hard about it? Or has it been pretty straightforward for you because you knew what you wanted to address? Look, I do believe in organizations of this size and our scale, you've got to keep it simple so that people can repeat it, buy into it, and then teach it. 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 order so that we can have a great cafe experience and a great drive-through 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

Not as simple as what I just said. But knowing what the objective is, is I think 99% of the battle. 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.

Yeah, that's exactly right. Like I'm not going to be able to one to solve how we get to the four minutes bringing order to mobile order. 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. 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, right? Yeah, that's right. It's like, hey, you may need to discontinue some items. We may need to...

In some cases, you know, 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 is 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. There's a window that you pick where you get it. That's right. You would be like, I'll get my coffee between 8 and 8.05. 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 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. 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. 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. That's just waste. That's just waste. And also you end up with not the best product either. Because it's been sitting there. It's been sitting there. And then usually what happens is you ask our barista to remake it.

And I'm like, oh, you know, it's just a vicious kind of circle. So but you hit the nail on the head. That's exactly right. Given all this, like, what do you feel like is at stake for Starbucks right now? 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.

uh, to people, you know, it's, 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 like, hello again, uh, let us reintroduce you to the Starbucks business and what the Starbucks coffee company is all about. And, uh, you're going to see us continuing to do that. And, uh,

we got to train, change the conversation of what the Starbucks coffee company stands for. You know, if people just call us a corporation, I'm not doing my job. And you know, we're going to use marketing to do that. And we're going to use experiences in the store to do that. Well, Brian, this has been great. Thanks so much for doing it, for taking the time. I really appreciate it. Yeah. Likewise. Great meeting you and a great, great spending some time talking with you.

I'd never talked to Brian before this, and I have to say I liked him. His confidence, calmness, and clarity of direction feels 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 is 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. We've grown exponentially since we opened 10 years ago. We initially started with, I think there were 10 of us, maybe, total, which is just completely ridiculous.

That's Jillian Field, Capital One business customer and co-founder of Union Market, a popular neighborhood market and cafe in Richmond, Virginia. With her growing success, now with 45 team members, Jillian has always kept sight of what really matters. We felt since we opened that having some sort of employee appreciation event was really important to us. Every year, Jillian holds a company-wide celebration to show her staff how vital they are to the success of Union Market.

Recently, she used points from her Capital One business card to host her employees at Busch Gardens Theme Park for a day of fun with family and friends.

We buy all of their tickets as well as their plus ones. It's a lot of fun and definitely a great team bonding experience. Capital One really has been great over the years. It's so easy. We could apply these points to supplies, masking tape and Sharpies and ticket receipt paper, but we like to retain them for our employees. That's been really important. To learn more, go to CapitalOne.com slash business cards.

Rapid Response is a Wait What original. I'm Bob Safian. Our executive producer is Eve Troh. Our producer is Alex Morris. Assistant producer is Masha Makutonina. Mixing and mastering by Aaron Bastinelli. Theme music by Ryan Holiday. Our head of podcast is Lital Malad. For more, visit rapidresponcesshow.com.