What if Clotted Cream Fudge Cold Brews are doing Starbucks more harm than good?

In September, the coffee chain brought in Chipotle chief exec Brian Niccol to transform the business. Niccol is widely credited with turning around the Chipotle fast food chain with revenue having doubled and its share price jumping 800% since he took over the helm in 2018.

In just two months at Starbucks, Niccol has already shaken up the leadership ranks and hired ex-Chipotle colleague Tressie Lieberman as executive vice-president and the company’s first and global chief brand officer. He has also appointed WPP as Starbucks’ new agency of record, with the agency network set to create a bespoke team to work solely on the account.

Niccol has been upfront about Starbucks’ problems. In an interview with Bloomberg, Niccol blamed an overwhelming menu, inconsistent products and lengthy wait times for its decline. In the company’s fourth quarter of fiscal year 2024 results, Starbucks’ global store sales declined 7% and its net revenue declined 3% to $9.1bn. Niccol said in its investor call: “Our financial results were very disappointing and it is clear we need to fundamentally change our strategy to win back customers and return to growth.”

In his business overhaul strategy, Niccol has focused a lot on products, with plans to strip back the menu and prioritize the taste of the coffee. On the marketing side, Niccol says the business has over-invested in marketing to its existing customers through its rewards program to the detriment of promoting the brand to non-loyal Starbucks drinkers.

“We’ve made it harder to be a customer than it should be and we focused our marketing too narrowly on Starbucks Rewards members,” he said. This story sounds familiar, with Pret a Manger reeling back its loyalty program earlier this year in a bid to become more attractive to a broader audience of coffee drinkers rather than Pret loyalists.

At Starbucks, Niccol plans to get back to marketing the brand to all of its customers rather than its existing brand fans. This has already been incorporated into its latest campaign by TBWA\London, which, unusually for Starbucks, includes a linear TV placement. “Our newly launched campaign focuses on talking to all customers and elevates the Starbucks brand in a much more visible way through broad reach media, such as linear TV,” said Niccol.

Efficiency at the expense of the community

Reilly Newman, a brand strategist and founder of Motif Brands, says the Starbucks brand has “lost its soul,” which he credits to the company sacrificing the community for efficiency. “Starbucks used to be a place where baristas were the neighborhood friends who knew your name and your drink,” he says. “Now it has become a fast food version of coffee, where names are printed on stickers, drinks are picked up without human connections, chairs are uncomfortable and bathrooms are dirty.” This decline in experience comes through in YouGov data on Starbucks. In the UK, the coffee chain has 100% fame score but a popularity score of just 41%.

Reilly believes the hiring of Niccol is a step in the right direction. However, he says Chipotle was also “a machine of efficiency and the brand has degraded over time.” He urges Starbucks to think more like Disney and less like fast food. “In this era of the economy, experience is all that matters. Convenience and efficiency don’t add value any more than running sales.”

Bringing back experience will improve brand perception, Reilly says. This is where he is seeing the shoots of progress, like bringing back the bar where customers can add condiments to their drinks and bringing back writing names on cups. To “resuscitate” the brand, though, Starbucks will need to do more.

Starbucks marketing should find something to stand for and anchor messaging around that, Reilly says. “Starbucks does have an association still of being a ‘premium treat,’ so leaning into this would be beneficial as the white cup with the green dot is a symbol of status in several areas,” he recommends. It could also try and stand for a higher standard of coffee, Reilly adds. “This strategy could entail more education around coffee and the art of their drinks. The ‘taste’ can refer to beverages, music, art and more. Starbucks needs to be a curator of taste and not just a slinger of drinks,” he says.

Then, finally, Reilly says Starbucks should be more local. “It needs to get away from celebrity endorsements or famous musicians and focus on local experts, artists, and musicians in each region.”

The three Ps of marketing: Product

Ben Essen, who is global chief strategy officer at Iris, says it only takes a minute on Instagram or TikTok to remember Starbucks’ potential. “Feeds are still filled with the infamous Starbucks cup. For young consumers, holding the latest Starbucks concoction remains a badge of identity on a par with leading fashion and technology brands.” The speed at which food and drinks trends are coming and going now is one problem adding to Starbucks’ woes, says Essen. “For novelty-hungry audiences wanting to be the first to try espresso tonics and umami lattes, Starbucks can feel like a brand from another time.”

But this trend could also be key to rebuilding. “The brand needs to embrace innovation and not the old-fashioned FMCG kind, but participation-fuelled innovation that is constantly connected to communities and front-footed in spotting and jumping on trends,” he says. Collaboration and a faster cycle for getting products to market will be key. He praises Starbucks’ recent tie-up with the health supplement AG1. “It suddenly gives Starbucks a role in the functional beverage space and a story for modern biohackers.”

Essen is pleased to hear Niccol speak about rebuilding its place as a ‘third space’ – the sociology term for places outside of the home and work. However, the third space bar is a lot higher than it once was, with specialist coffee shops on every corner, he says. Given the natural attraction of an independent, Starbucks doesn’t just need to compete with an independent shop but provide a better service in every way. “Perhaps the most important reputation driver exists beyond the scope of a creative agency. The topic we hear over and over in QSR focus groups is a simple one: how clean are the toilets?”

Starbucks doesn’t just have a brand problem; it has a product problem, says Essi Nurminen, head of strategy at Born Social. She refers to Niccol’s Bloomberg interview, which talks of overwhelming menus, inconsistent products and too long of a wait. “These are the non-negotiables to be addressed before even beginning to think about tactics or channels.”

As well as product issues, the Starbucks brand has been tarnished by scandal. Using social listening tools, Nurminen identified that across X, Instagram and Reddit, nearly 80% of mentions of the brand in the UK over the last 12 months are negative. Key themes revolve around their reported tax evasion, lacking employee rights and Gaza-linked boycotts. “The brand faces a real challenge to regain relevance and understand its customers of today, not the loyalists of its heydays. This requires a significant shift in its communications model,” she says.

Nurminen advises Starbucks to embrace co-creation on social media to create community-led marketing and experiences. “It could invest in its employees, the baristas, and turn them into local influencers in different markets. All while continuing to reinforce and reinterpret the distinctive brand assets: the iconic cup and the green apron.” It could also consider investing in blended physical and digital experiences, such as Roblox for example.

However, she tells The Dum: “In reality, none of this matters unless the brand first goes back to the basics and fixes its most precious asset, the product.”