Starbucks’ new CEO, Brian Niccol, has announced plans to revamp the coffee chain’s menu in an effort to reverse declining sales.
The company has been facing a significant drop in profits, leading Niccol to suspend financial forecasts for the upcoming year.
Preliminary quarterly results show a sharp fall in both sales and profits, with Starbucks’ shares dropping more than 4% after the announcement.
The company reported that global sales are expected to decrease by 7%, and profits will be down 25% for the quarter ending in September.
In China, where the economy is struggling, Starbucks saw an even steeper decline, with sales dropping 14%.
Niccol, who took over as CEO in September, acknowledged that Starbucks needs to make major changes to win back customers.
“We will simplify our overly complex menu, fix our pricing, and make sure every customer feels Starbucks is worth it every time they visit,” he said.
The company has been hit hard by rising living costs, which have caused many customers to cut back on spending.
Despite increasing investments to attract more customers, the strategy has not yet been successful. Rachel Ruggeri, Starbucks’ Chief Financial Officer, said, “Despite our efforts, we were unable to stop the decline in customer traffic.”
Niccol, previously the CEO of Chipotle, was brought in to turn things around at Starbucks.
However, he has faced criticism for commuting nearly 1,000 miles from his family home in Newport Beach, California, to Starbucks’ headquarters in Seattle using a corporate jet.
Some have called this practice inconsistent with the company’s commitment to environmental sustainability.
Starbucks is expected to release its full financial results next week.
