Starbucks CEO Hints At Cheaper Cups, Better Food, And More 'Theater'
Laxman Narasimhan hasn't been CEO of Starbucks for very long. In fact, he just took over in March, succeeding Howard Schultz, who led the coffee giant in three different stints across five decades. Despite being new to the job, however, Narasimhan has already distinguished himself by his hands-on approach. He has trained as a barista, for instance, and has noted he plans to continue working in this capacity at least once a month.
This hands-on approach, in fact, appears to have indicated to Narasimhan that several changes are needed for Starbucks, which operates more than 36,000 coffee shops around the globe. Business Insider reports that, based on Narasimhan's barista experiences, he believes that the more than 1,500 possible cup and lid combinations currently available at Starbucks locations are far too many. The new CEO claimed a simplification was needed in this area and suggested that cheaper cups, and fewer of them, were the solution.
Although cups may be getting cheaper at Starbucks, there's a good chance the food improves. "Food could use more work," Narasimhan told CNN Business, noting that too many food items were unavailable and that better innovation and efficiency were needed in this area. The coffee company's CEO likened the front-of-house operations at Starbucks' coffee shops to a theater, while comparing the back-of-house operations to a factory. The factory needs to be more efficient overall, Narasimhan concluded. The theater aspect, meanwhile, should continue to be highlighted.
More changes could be coming to Starbucks
Before Schultz stepped down as CEO of Starbucks, he shared a message regarding his vision for the future of the company. In this message, posted in July 2022, Schultz unveiled a "reinvention" plan, describing the changes he felt were necessary for Starbucks to continue to grow and evolve. Significantly, he used the term "connection" in dual contexts — noting it was important to strengthen connections with customers, and with the planet itself. The latter is a reference to company sustainability efforts.
What Schultz saw as a reinvention, Narasimhan conceptualizes as a "refounding." In his own message to the company, published contemporaneously with his ascension to the CEO position, he laid out the areas in which he felt the company could improve. These areas — which include the digital realm, sustainability efforts, and operational efficiency — are likely to be the focus of future changes. Efficiency, in particular, seems to be an area of emphasis for Narasimhan.
"There is more work to do to tailor our stores on the demand that we see, advance our technology, enhance how we innovate our equipment and also more fundamentally, how we get back to focusing on fundamental operations and executing better," affirmed the former PepsiCo executive during his debut earnings call as Starbucks CEO.