Starbucks is facing some big changes in 2025
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- Starbucks underwent a lot of changes in 2024, and more are likely coming in 2025.
- New CEO Brian Niccol will face choices about unionized stores and the China business.
- Starbucks faced slumping sales and dealt with activist investors in 2024.
Starbucks was on the cusp of a big change in late 2024. This year will bring even more shifts for both baristas and coffee-lovers.
Starbucks' sales had slowed and even lost ground in the first half of 2024. Customers and employees pointed to operational challenges for the company, such as a lengthy menu and an explosion of mobile orders. There were even two activist investors with stakes in Starbucks during the summer.
Then, in August, the coffee chain surprised investors by saying that Brian Niccol would take over as its CEO, replacing Laxman Narasimhan, who had held the job for roughly a year and a half.
Niccol was known for turning around the Mexican grill chain Chipotle after a food poisoning crisis. He announced some changes after starting as CEO in September, such as cutting the number of discounts that Starbucks offers to members of its loyalty program.
Starbucks has also stopped charging extra for non-dairy milk, and is bringing back self-service bars for milk and other condiments to reduce complexity for its baristas.
It's already clear that those were just opening salvos.
Niccol said in October that he's "putting a full-court press" on getting drinks to customers within four minutes of when they placed their order.
He has also said he wants Starbucks to return to being a "third place" where people can hang out — a role it played for many patrons in its early years of national expansion.
Store employees — whom Starbucks calls "partners" — could get details on how that change will happen at three-hour meetings scheduled to take place later this month.
Partners have pointed to some specific areas where Starbucks might have to make adjustments to achieve Niccol's goals. Some have said that their Starbucks stores need to be better staffed, especially during the busiest times.
Others have suggested that a better process needs to be developed for handling mobile orders, which can be difficult to manage in addition to customers who walk in and others who order at the drive-thru.
There are further issues that Niccol will need to address in 2025.
These include Starbucks' unionized stores, which account for about 4.5% of the chain's locations. Starbucks workers at those stores went on strike in the days leading up to Christmas and have yet to secure a contract. An agreement would be the first ever between Starbucks and its store workers.
Starbucks and Niccol also have to craft a strategy for the company's business in China, its second-largest market after the US. In October, Niccol said that Starbucks was considering "strategic partnerships that could help us grow in the long term."
The following month, Bloomberg reported that Starbucks was weighing selling a stake in its China business and finding a partner in the country to manage the unit.
Niccol has only been at the helm for four months, but it's clear he has big plans for the coffee chain at home and abroad. Investors were hopeful when he joined the company, though it's too soon to tell whether his actions will result in a recovery this year.
Starbucks' challenge for 2025 will be to make itself more than a place for a quick cup of coffee. The chain has long held itself to higher service and quality standards than most fast-food joints, from offering healthcare benefits to part-time employees to encouraging customers to stick around the store and relax.
Yet one barista with almost two decades of experience at the company said his store has drifted from those higher standards lately.
"It started out as a trendy, quirky coffee shop job, and it's just morphed into this soulless fast-food empire since that time," the employee told Business Insider earlier this year.
Do you work at Starbucks and have a story idea to share? Reach out to this reporter at abitter@businessinsider.com.