Starbucks hired CEO and Chair Brian Niccol to turn the company around. After one year, the turnaround is still struggling to get off the ground. According to the Wall Street Journal:
In Starbucks’s Seattle headquarters, it was known as “Project Bloom.”
Launched earlier this year, the hush-hush undertaking evaluated thousands of the company’s coffee shops across North America on profitability, and the experience of customers and baristas.
It led to a roller coaster of a week in late September, in which the company abruptly closed hundreds of stores and laid off thousands of employees. It was Starbucks’s second round of corporate layoffs in less than a year under Chief Executive Brian Niccol and among the chain’s biggest closing of cafes since 2008.
“The reality is the business has not performed and we needed to recognize that aspect,” Niccol said in an internal company forum Tuesday, a recording of which was reviewed by The Wall Street Journal. “We needed to make some changes.”
In a year at Starbucks’s helm, Niccol has overhauled its workforce and operations. He has remade the C-suite, hiring new executives to head operations, finances and development, while technology and coffee-sourcing leaders have retired in recent weeks. Menus and advertising are also evolving.
Now, with the cafe closures and staff cuts, a company long known for its sprawling growth has abruptly shrunk.
Niccol and his team have said major changes were needed to rebound from six consecutive quarters of declining same-store sales, and to build a more sustainable company that can pave the way to growth. Americans are recoiling at rising restaurant and coffee prices and eating out less, making Starbucks’s turnaround more challenging.
One strategy that Starbucks still refuses to pursue: walking back its woke branding. The company has become a poster child for wokeness by letting employees wear Black Lives Matter apparel, implementing a destructive “open door policy” after racism accusations were made against Philadelphia store in 2018, partnering with the pro-LGBTQ Human Rights Campaign, and engaging in “systemic discrimination” via DEI. NLPC addressed all these points of underperformance in a proxy memo filed with the SEC in 2023 that opposed Howard Schultz‘s board reelection. A study conducted by Columbia Business School in 2024 used Starbucks as an example to show that conservatives are willing to shift their brand preferences based on political messaging.
Starbucks has doubled down on its DEI policies even as many other companies are walking them back. The company may continue to underperform so long as it continues to embrace woke policies that are toxic to conservative consumers.
