When The Coffee Sweats

The new CEO of Starbucks, the beleaguered corporate coffee giant, is pissing people off already because of his travel routine. Simply put, he’s commuting from Newport Beach to Seattle by private jet.

It could be worse. The last company where Brian Niccol was CEO, Chipotle, actually moved its corporate headquarters to be closer to him. Oh, they said it was for “growth opportunities,” but given the premium treatment he’s getting for the Starbucks job, it sure feels like a leader who is refusing to uproot his life for his career.

But Niccol can get away with it because he’s seen as a rare example a turnaround artist in the rough and tumble world of fast food—and Chipotle is the shining example of his work.

If you’ve been observant of late, you’ve probably noticed that fast food is having the opposite of a moment. The sector in general is really struggling in part because of inflation, consumer disinterest, and labor pressures. A couple recent headlines underline the point:

• Subway recently announced plans to offer its footlongs at $6.99 after an attempt at a cheaper “snack” option failed to win over customers. That’s actually a significant deal for the chain, which has seen its subs rise as high as $15 for some options. We’re well past the days of $5 footlongs.
• Taco Bell is giving some franchisees the option to ditch breakfast, in part because that’s what the franchisees wanted.
• McDonald’s reported its first quarterly sales decline in years, with higher labor prices and costs shouldering the blame.

This has led to some dramatic hail-Mary moves, mostly in the price-cutting realm, but none quite as dramatic as what Starbucks did. The burned-beans coffee giant, which had been struggling under both the weight of troubled strategy and the backseat leadership of longtime former CEO Howard Schultz, needed a change. (And fewer LinkedIn posts from Schultz.) And they went big—ditching CEO Laxman Narasimhan for Niccol, a guy whose reputation is nearly equal to that of Schultz. It’s going to be harder to push Niccol around with a LinkedIn post because his track record is so strong.

And that could lead Starbucks, the massive coffee chain that has always promoted itself as something closer to a movement, into an admission of sorts: Yes, it’s fast food, just like Dunkin’. (As if to underline the point: Starbucks this week introduced the pumpkin spice latte. Yes, in August.)

Is the new CEO going to care about this? (99 Films/Unsplash)

Over at Fast Company, Clint Rainey suggests that Niccol’s hiring could be a damaging blow to the good thing about Schultz’s model: The embrace of third-place ethos above all else. As Rainey notes, the problem is one clear thing:

Then the pandemic rewrote the rules. Cafés stopped being hangout spots, to the extent they still were. The red-hot growth of app orders and drive-through traffic led customers to expect service that’s unreasonably fast, frustrating baristas and even drawing store layouts into question. A standard Starbucks pickup counter nowadays might feature hot coffees, iced energy drinks, drink carriers crammed with four different types of Venti-size blended beverages, and a bevy of custom orders whose add-ins could involve powders, syrups, or scoops of flavored pearls. This has forced the brand to “reimagine the Third Place” so drastically that observers have been arguing, for a while now, that it more closely resembles discarding the model entirely.

In other words: Starbucks wants to be seen as a third-place business, but (thanks to the pandemic and its mobile app) it’s really just a combined pickup counter/drive-thru with additional seating. And completed drinks, if not picked up quickly, can turn into soppy messes on that counter. I’ve seen it. Those drinks sweat.

As a coffee nerd, Starbucks has never been the preferred option, but as someone who works remote, I used to find myself at their stores pretty often. Recently, I found myself sitting in one for the first time in a while, and I kind of felt like the charm had started to fade. The one I usually go to, which had opened only a couple of years prior, had some construction work done on the inside—at the cost of the seating area. The result is that it has only a handful of seats where you can pull up with a laptop, and the people who are typing are on top one another. (Meanwhile, there’s a whole front section, with chairs but no tables, rarely used. I’m not saying, I’m just saying.)

Other chains have been better about striking this balance. With Starbucks, something feels off. But they seem to have hired a guy who probably thinks there are too many places for people to work on their laptops.

CEOs suggest priorities. For Starbucks, the third place doesn’t feel like one right now.