Don’t Chipotle My Starbucks
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Customers rebelled when they thought Chipotle reduced their portion sizes. Will Starbucks customers suffer a similar fate now that former Chipotle CEO Brian Niccol has taken the helm of the Seattle-based coffee company?
Niccol became the official CEO of Starbucks on September 9, 2024. Customers aside, there’s good reason to believe he can translate the shareholder success he experienced with burrito bowls to coffee. Chipotle stock gained ~733% during his tenure from 2018 to 2024. In the year preceding him, Chipotle stock had plunged ~21%.
But what was great for shareholders was not always felt by customers (more on the Chipotle social media drama below). Niccol will have to balance those (at times) competing forces if he wants to succeed at Starbucks, especially considering its passionate coffee customers.
Let’s examine how Niccol might do it, first by looking at how he rescued Chipotle and how those lessons learned could be applied to Starbucks.
How Niccol rescued Chipotle
Chipotle before Niccol had many of the same problems that Starbucks is experiencing today. Especially in terms of mobile ordering.
Prior to Niccol, customers who ordered via the Chipotle mobile app had to wait in line with in-store customers. This was a huge time waste. Niccol created a grab-and-go shelf next to the cash registers of each restaurant, and they educated customers on how to find their food. He also added a separate kitchen in the back of the restaurants exclusively for mobile orders.
These changes made the ordering and pick-up process for mobile and in-store orders far more efficient. A new rewards program that was implemented in 2019 further incentivized customers to return and allowed Chipotle to track some 22 million members.
One area that Niccol did not change much was the food (according to Niccol at least). He tried to focus on what made Chipotle, Chipotle. Quality ingredients. Fresh, made-to-order food. Efficient, fast-casual service.
Niccol described his success at Chipotle in a Harvard Business Review article:
“Over the past few years Chipotle has illustrated how a business can be revitalized through refocusing on its original core values—in our case, culinary excellence and great customer service.”
Unsurprisingly, his plans to revitalize Starbucks are not much different.
Similar strategies for Starbucks without going full Chipotle
Shortly after becoming the official CEO on September 9, Niccol published this message: “Back to Starbucks.” The title itself should indicate that his plan for Starbucks is similar to his previous plan for Chipotle – a return to original core values.
Below are three of the primary changes Niccol will likely make based on what he did at Chipotle and what he plans to accomplish in his first 100 days at Starbucks.
Simplify the coffee menu
There are currently billions of drink permutations customers can order at Starbucks. It’s overwhelming, not only for irregular customers but for baristas too. Niccol will need to simplify the coffee menu to reduce costs and most importantly, tell a better story.
As with many things in life, when a person or business fails to focus on a few key areas, they focus on nothing. It’s hard to capture the attention of new or occasional customers if they don’t clearly understand your story. A simple, clear menu is one of the best mediums for communicating at a restaurant.
But that doesn’t mean it will be easy. In our increasingly health-conscious world, Niccol will struggle with sugar.
So many of Starbucks’ high-margin drinks contain sugary syrups that aren’t healthy. He should explore adding more sugar-free syrups or new healthy options to the menu, including juices or smoothies.
If Starbucks is going to reach the next level of growth, it will need to tell a compelling (and simple!) coffee story, while also focusing on the desires of health-conscious consumers.
Separate mobile versus in-store ordering
As mentioned above, Niccol made this change at Chipotle when he discovered that mobile and in-store orders were competing with each other. So he created a second kitchen in the back.
Starbucks may not have the luxury of space in some of its stores, but creating a separate process for mobile is a no-brainer. Far too often I walk into a Starbucks, order in-store, and then watch as baristas are consumed by mobile orders before they can even get to mine.
When large mobile orders like the one above come in, forget it. The busier stores need dedicated baristas focused solely on mobile. They can help with in-store orders as needed.
It’s a terrible experience for customers ordering in-store when mobile orders clog up the queue. Separating these processes will make the entire experience more efficient, not only for customers but for baristas too.
Return to Starbucks’ “third place” identity
When Howard Schultz founded the Starbucks we know today, one of the main inspirations was the Italian cafe culture. On trips to Milan, he witnessed how Italians lingered and enjoyed the coffee and atmosphere of their cafes. Schultz wanted to bring that to America, and then across the world, with Starbucks.
Some of my first memories of going to Starbucks as a kid with my Dad lived up to those ‘third place’ aspirations. My Dad even jokingly called it “Sweatbucks” because of all the sweaty cyclists who congregated there with us on Saturday mornings.
Starbucks at its best is a community watering hole. An oasis in a fast-paced city like my current home in Manhattan. A comfortable place to sit, relax, and catch up with an old friend. A convenient spot to take a bathroom break.
Over the past few years, Starbucks has lost some of this identity. Many of the stores don’t have adequate seating. Bathrooms are locked or disgusting. Baristas aren’t always warm and cheerful.
Niccol needs to rediscover the Starbucks magic of its third-place identity. If he can do that, the people will come.
Don’t Chipotle my Starbucks!
When the people do come, Niccol can’t make them mad. At Chipotle, Niccol struggled to avoid social media scrutiny. Multiple viral trends were difficult to navigate, although Chipotle’s marketing team generally did an admirable job.
Famed food reviewer Keith Lee has posted multiple reviews on Chipotle over the years. The first few gave Chipotle rave reviews, and resulted in Chipotle partnering with him in early 2023. Chipotle even added his unique order, the “Keithadilla”, to their menus, which was a quesadilla with fajita steak and vegetables.
More recently, however, Keith Lee has been very critical of Chipotle. He’s even credited with starting the movement of people ordering Chipotle but then filming themselves walking out of the store if their portion sizes were too small. This trend spread like wildfire.
Niccol tried to respond to this controversy by insisting that Chipotle had not changed its portion sizes. He recommended that people give a little head nod if they wanted more. This led to more viral social media content of people giving head nods to see if it worked.
Niccol later conceded – after an internal review – that some 10% of Chipotles were skimping on portion sizes. Despite the relatively low number, the perception of small portion sizes still stuck on social media.
Chipotle, to their credit, did have some epic rebuttals to social media stars who complained. Comedian Trevor Wallace did an animated review where he even criticized a random white fork that came with his Chipotle delivery order instead of the typical black forks in Chipotle stores.
Chipotle sent him a catering box full of black forks.
Needless to say, Brian Niccol will have his work cut out for him at Starbucks if wants to avoid social media scrutiny following any changes he inevitably makes to the Starbucks menu or business. Chipotle under his leadership did a good job of rebutting social media outrage, but ideally, Starbucks finds ways to initiate positive trends instead of constantly performing damage control on the negative.
Starbucks customers do not want Niccol to “Chipotle their Starbucks” in the way many Chipotle customers felt about their burritos, quesadillas, and bowls. While cost-cutting and efficiencies may be good for shareholders in the next quarterly report, it can create long-term problems with customers if executed poorly.
Niccol will need to balance customer satisfaction with stock price performance. It won’t be easy, but his pay package and practically unlimited use of the Starbucks corporate jet, while he commutes from his home in California to the Starbucks headquarters in Seattle, should cushion any blows.
I do think, however, he’ll have to change the daily routine he had at Chipotle. What type of CEO has this degree of work-life balance? Late morning gym, peaceful walks with his wife, streaming his favorite shows each night, etc.
If he wants his first 100 days at Starbucks to be impactful, and not in some of the negative Chipotle ways, he won’t have the luxury of time.
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