That's some really rocking intro music.
If you didn't have enough caffeine this morning, we got the music.
It reminds me of like that, you know, the AC/DC like back to Starbucks ads. Very close. We don't think we license AC/DC, so we use something else.
Well, we should have talked about that ahead of time.
We should have pre-talked about it. Yeah.
Anyway, good morning. Thanks for being here. I hope everyone's as caffeinated as the both of us are. I'm Mark Wilson, global design editor at Fast Company, and I'm obviously here with Brian Niccol, the CEO and chairman of Starbucks. And no matter what your feelings are about Starbucks, I think in your heart of hearts, and certainly my heart of hearts, there was a time that Starbucks was the best. And I don't know that we're going to agree on what that year was, but whatever it was, Brian wants to bring you back to it, right? And I think that's really the core of his back to Starbucks plan, his back to Starbucks strategy. You know, since taking over the position last year, he is leading a design-led turnaround for Starbucks, reskinning stores, bringing back seats, rethinking sort of back of house service. But I do have one little confession, which was when Brian and I met for this story, you see the cover story, it's floating around here. I said, 'Brian, I'll admit when you took the position, I wasn't sure you were the guy for the job.'
Which is always the best way to start a chat, right?
Yeah, sure. But you know, that's because his bonafides were really the top guy in the restaurant industry, right? He came from Taco Bell where he taught us all to live moss, right? He launched an app there. He turned that company around. He went to Chipotle, which is a very different company. And this is like Chipotle is very analog driven. And he installed screens, a second line for making burritos, and brought them new efficiency, brought them an app, upgraded their app significantly and turned Chipotle around. And what I said was, Brian, well, here's the thing. Starbucks has the best app already.
Right. Like, and I think what we really got into quickly was that Starbucks to have a design turnaround really need to rethink the entire infrastructure.
Yeah, that's right. First of all, great to be here with everybody, good to be with you again. And you know, look, the Starbucks strategy of back to Starbucks is all about ultimately getting to the place of being the best of Starbucks again. And if you think about what makes Starbucks special is how you feel when you're in a Starbucks. When it's truly a community coffee house, it truly is the third place. I think it is our point of difference and it's why people fell in love with Starbucks. It's why I fell in love with Starbucks, you know, 20 years ago, when kind of we had the first Starbucks come to the little town I was in just outside of Cincinnati. And you know, I think there's no reason why we can't have that today. And you know, I actually think people want it more than ever. You know, I know digital and AI and the ability to connect and get bits of information in all forms or fashion are like faster and easier than ever before. But I think nothing beats the good old-fashioned sit down with a friend, sit down with a family member, sit down for a job interview face to face over a cup of coffee. It never can be replaced. And so I think when we do it right, you know, there's nobody better. And I firmly believe the best days of Starbucks are still in front of us. And I've had the opportunity to travel around the world and experience our coffee and the community coffee house around the world. And it transcends cultures, it transcends borders, it really is, you know, I think the best of humanity when you get people together around a table in a safe place over a cup of coffee where you can, you know, I really do believe it's important to get these ceramic mugs back too because there is something to this like mug hug when you get your warm cup of coffee and you know we want all those little moments to be back again and I think we talked about this, you know we're designing a new mug, we're designing a new seat, we're doing these coffee house uplifts because I do believe the customer experience, the aesthetic of that community coffee house is really important.
I mean, it seems like in an age when everything is basically digital and convenience dominates that it's no longer a distinguishing feature for your brand.
I think all those things are just category anties, right? It's look, we got to have access through the app. We got to be quick. We got to be convenient. We need to have drive-throughs. I think the thing that separates us is that coffee house moment. And whether you're walking into a coffee house to just grab your cup and go, I think it's important that you walk into a coffee house. You know, I mean, we've all been in those places where you've gotten to-go food. And if you walk into a place and it's empty and soulless, you don't feel great about that to-go order. If the place has a soul, a connection, even if it's a to-go order, you feel much better about that to-go order. And I think the same is true for Starbucks.
I mean, that's part of the business argument here, right? That basically upgrading the physical space will actually increase digital orders and sort of other things along those lines.
Absolutely. And look, the other thing too is there was a lot of feedback from our partners on what it took to run the Starbucks because now you have three key access points, right? You got the drive-thru, mobile order pickup, and now you have the cafe or the counter experience for the cafe. And you know, we've worked on technology and process and flow and staffing to ensure that our teams are set up where they can do all three of those access points successfully. And some of the feedback I was getting initially is they're not set up for success. And so you might have heard us talk about this green apron service model that we just started to roll out. You know, we're investing $500, $600 million into additional labor into the stores, but it's purposeful. It's purposeful to make sure that every transaction is more than a transaction. It's actually a moment of connection both at the time you order and at the time you hand it off. And we say it starts and ends with the Green Apron partner because the great orders start with a barista experience and they also end with a barista experience. So whether that's a mobile order coming in and you know we hand the coffee to you or if you're going through the drive-thru. I mean, some of the best experiences I've had just before I was flying out here to New York, I swung by one of our stores to go through the drive-thru. The woman was terrific, like, you know, super engaging at the order board and then really engaging when she handed me my coffee on my way out. She might have been a little bit surprised it was me, but you know, nonetheless, she was terrific.
I imagine like the most frightening and exciting customer they could have.
I don't know why. I actually think I'm a good customer. So I want to rewind a bit which is you know you start last year you come into the role and you know tell me what drove you crazy.
So well there were a few things that drove me crazy which was right you know so I had left Chipotle and I had about a month month and a half before I was starting at Starbucks and the thing I did was I started going to Starbucks with a lot more frequency because I was kind of between jobs and I heard that's kind of one of the things you do is you go hang out at Starbucks.
Exactly right. Write a novel. Yeah. But you know when I went what I quickly realized is we had done some things that basically did not deliver on having a great in cafe experience. You know I walked into a store outlets were covered or outlets weren't working. You know there weren't enough seats. It was clear that we had prioritized a waiting area for mobile order over solving how do we better sync up the timing of when you order your drink and when you show up for your drink so that you don't need as big of a waiting area and we can put those seats back in. You know, I also saw it was very transactional as opposed to giving our baristas or our partners the time to create connection and also do their craft correctly consistently. And so when I started to see these things and it was really interesting there was one customer he happened to be in front of me and you know he didn't realize I was the CEO. A lot of people at this time didn't know I was the CEO and you know he ordered a brewed cup of coffee from our Clover Vertica machine and our barista turns around makes the brewed cup of coffee and then sends it down the line behind lattes and everything else. And the gentleman's literally getting anxious. You can tell he just wants his cup of coffee like right now. You know, just hand it back to me. He's good to go. And instead, we were sending it down the line. And you know, so I just asked him, I was like, 'Hey, does this happen to you all the time?' He's like, 'All the time.' Yeah.
He goes, 'And you know what would be really helpful?' He's like, 'I can put my own milk in my coffee.'
And you might have heard.
Like the good old days. And you know what I found out was we had removed the condiment bar during COVID and we had never put it back. And we had also changed the process of brewed coffee to go down the line as opposed to just hand it back to you at POS and allow.
It went down the line because the barista was the one to pour in the oat milk or whatever milk.
Sugars. And inevitably people are very you know your coffee is very personal. So to tell somebody how much milk to put in or how much sugar to put in, it's very hard to get it correct when the person doesn't see what's going on. So we also had a scenario where we're redoing these coffees a lot. Or worse yet, I saw somebody hand somebody their cup of coffee, a cup with some milk, and then a cup full of sugars. And then this person's got now three cups, you know, and is looking like, well, where am I supposed to go with this? Because we don't have the seat for him to sit down to go put the cream and sugar into his coffee. So, you know, those were little things where I'm like, gosh, this is really frustrating and there's no reason for it to happen. And it made it hard on our partner. It made it hard on our customer. And these were simple things to solve. And hopefully you've seen that already go into effect where now we have the condiment bars back. When you do order brewed coffee, they should hand it to you right at the order point.
Let me pause you here though because yeah, on paper, it's simple enough to, you know, put the milk back on the condiment bar. On the back end though, you stopped charging more for different milks, right? Alternate dairy milks or whatever, right?
And that's a relatively big decision, but you made it pretty quickly.
Yeah. Well, that was another thing that I was hearing from customers and I guess probably the point to go back to your question. When I first started, I always take the approach of what are customers saying, what are our partners saying, what's working? What's getting in the way? And then, you know, it's a really easy list to create to say like, okay, if we just fix these things, to eliminate these pain points for both our customers and our partners, I think we're going to make a lot of progress. And, you know, one of the pain points was why is it, you know, regular milk there's no upcharge, but there's an upcharge when I want oat milk. And, you know, I was kind of listening to it. I'm like, I think they're right. As a customer, that would not delight me. So, we made the decision to stop charging for alt milk. And with doing that, that also freed us up to then have the right milks on the condiment bar because what I found out was one of the weird little barriers was, well, we wanted to charge for the alt milk, so we didn't want to put it on the condiment bar.
Yeah. I mean, I saw the hacks where people like get the espresso, pick up the oat milk, dump half the container, kind of like screw everybody, but also save a dollar.
Yeah. Well, what's so interesting is like you see these compensating behaviors and you're like this is really silly. Like we can make it very simple and the simplicity actually works for everybody. And so, you know, we made that decision. We put the condiment bars back in. I mean, the one thing I had to get comfortable with at Starbucks is, you know, and if my team was here, I'm kind of a broken record of like, I want to do it faster. Like, why can't we do it faster? And you know, but I found that in my time at Chipotle. I found that in my time of talk I've always I guess been a little bit impatient. Especially when you get clear feedback of what you know you need to go do and you know but the scale of Starbucks resulted in like we had to track down you know hundreds of thousands of these cars and you know that took a little bit of time. So I couldn't get it done.
They were gone. I wonder where the cars went. That was a good documentary in that.
I'm guessing people's closets are full of cars. I don't know. I don't know.
You're doing you're changing store design quite a bit, right? So, so there were all sorts of store designs before. Moving forward, there will be sort of three core store designs. I would say small, medium, and large. That's probably the wrong framing.
Yeah, I was corrected. It would be, you know, tall, grande, and venti.
Yeah. And you know, the tall in particular, is going to be a new format store we haven't really seen before, and it's modeled after a classic espresso bar.
Yeah. So, the idea is in a small format, you can still have a great barista connection and still have a couple seats. Like, we've all experienced these places, right, as you've traveled around the world. The traditional espresso bar is actually though just a walk up to the bar, get a shot of espresso, maybe have a few words, and out you go. I do believe we still need to have some atmosphere where if you want to sit down and have your drink, you can still have a seat. So they'll be small formats primarily driven towards the idea of like hey I want to get my coffee maybe just have a minute or two with the barista and then move on or a minute or two with others that are in the store but also provide you know six to eight seats where if you want to sit down you can sit down. And then obviously when you go to the medium or the grande size store you're going to have probably 30 seats and then you know as it gets bigger you can get to 50 60 seats and in some cases even bigger. Like you might have seen it was getting some news. We just opened a flagship store in Spain at the Bernabeu in Madrid and you know that is like the third place on steroids.
I mean you have a complete view of the pitch.
For the Real Madrid soccer team. It's amazing.
It really is amazing. I think actually I think Fast Company says the most beautiful Starbucks in the world right now.
Wasn't my article. I prefer the one in Chicago. I was in Chicago.
You know what the one in Chicago is beautiful too. And so the thing my point is it can be beautiful when they're big and multi-storied or they can be beautiful and intimate when it's 800 square feet with 10 seats there. We do not have to make a tradeoff.
But you keep saying seats and you know you're adding 30,000 seats back.
I think you know what I think it's going to be closer to hundreds of thousands of seats back in. Because what's happened over time is you know some stores might have had initially 70 seats and today they only have 30. We're going to put the seating density back in. So ideally that store will go back. I don't know if we can get all the way back to 70 but you should be able to get back to maybe 60. So we're going to be putting back in hundreds of thousands of seats. And I think it's going to really accentuate the point of difference of Starbucks.
I mean it is true. like we've basically seen every major restaurant chain rip out seats over the last 5 years. I wrote an essay a few years ago called Death of a Place to Sit and you know we've seen it basically everywhere. I mean do you think this is going to lead the industry and sort of resurgence of seating? Do you think people sort of draft off of Starbucks like they did Starbucks's, you know, rewards app years ago?
Yeah, look, I hope so because I do think the more people can actually connect face to face and, you know, kind of share those moments with each other, it there was a I hate to reference ads, but there was a great ad that Starbucks did a couple years ago, where they literally went around the world in 24 hours and just showed people connecting over coffee. And it's powerful. And you know what? I think you're seeing it even with like the resurgence of casual dining, right? I mean good friend of mine Kevin Hawkman runs Chili's and Brinker and I think he's doing a great job because he's bringing back that moment where you can get together and in their case it's over a burger. But it's like I think people want a place to be able to spend time with each other over food or over coffee. And you know, when I was at Chipotle, there was a moment there where we was like, 'Oh, you don't need that front of house anymore. You can just do everything through the digital makeline.' And I at the time, I felt like it was a little bit out on the island. But I was like, I disagree. I think people like to come into the store, interact with, in that case, going down the line to get your customized experience. And the same thing is true at Starbucks. I hear over and over and over again, the connection between the barista and our customers is unlike anything I've heard. And there are these examples where people walk in and the barista knows them so well that they've already made their drink before they've gotten to the POS. And you know, I wish every single one of our transactions was that intimate, that personal. That's what we need to get to.
I mean, you bring up Chili, which I think is a really interesting company. You know, Applebee's is somewhat similar in this space where they are finding market share because they have these $13ish dollar meals that aren't really more expensive necessarily than McDonald's has gotten to. But offers a little more atmosphere perhaps higher integrity ingredients and you know you can go somewhere right and hang out. But I am wondering a lot of this is taking a lot of investment. you're going to staff up. These store remodels cost about $150,000 a piece, right? Or sorry, uplifts remodels cost a little bit more. But are you worried with sort of a pinched middle class where we're seeing, you know, credit card debts rising? You know, the economy is obviously shaky. We have global instability. That all of these improvements, you know, I do believe could move the needle significantly for Starbucks. But if you have all of these challenges around a six or seven dollar coffee, does that offset your gains?
You know, I don't think so. I think when you have a commitment to craft and quality like we do, and then you have a commitment to what I would call a great customer experience, like I would love for Starbucks to become the world's greatest customer service company. Like right now, when I ask people, name me a great customer service company, I usually get a blank stare.
And which I find fascinating because I'm like, well, geez, that tells me right off the bat there is a huge opportunity to be the defining customer service company. And I think there is tremendous value in being a world-class customer service company combined with great craft, great quality food and drink. And I think when you look at putting those two things together for the price that we will have to charge for it, I think it'll turn out to be invaluable.
Comes back to experience.
Comes back to experience. Yeah. And you know, I think you might have even had it in the article. It's kind of interesting to have the simple idea of putting hospitality back into the hospitality industry.
