Starbucks sees first sales rise for nearly two years amid turnaround plan

Starbucks has reversed an 18-month slump in sales after launching a turnaround plan designed to simplify prices and make its stores more inviting to customers.

The coffee chain said its global same-store sales rose 1% between July and September, the first increase in nearly two years.

This was largely boosted by its international markets, where same-store sales rose 3%, but its performance in its home US market remained flat.

Starbucks’ executive Brian Niccol told investors the group still had “a lot of work in front of us” but was “moving in the right direction”.

The coffee chain closed 627 stores in the last quarter as part of a restructuring plan announced in September. Around 90% of the closures were in North America, but 10 UK sites also permanently shut their doors.

It also axed 1,100 worldwide corporate roles in February in a bid to “simplify” its business.

Niccol, who was credited with boosting the fortunes of Chipotle, was brought in last year to turn around a 3% slump in global sales at Starbucks.

He has launched a wider restructuring plan dubbed ‘Back to Starbucks’ which has seen the chain simplify its drinks menu, return baristas to writing customer names on cups rather than printing out labels, and aim to make its cafés more inviting places to stay.

Other initiatives saw Starbucks stop charging customers’ extra for non-dairy milk in the US and Canada last year.

In an update to investors this week, Niccol said Starbucks had made “much-needed investments” in staffing and nearly half of its US stores now opened an hour earlier at or before 5am.

The group has also pushed to improve its speed of service and is trialling a new coffeehouse design with lower build costs and a better use of space in New York.

Niccol said Starbucks was working on bringing “warmth, texture and seating” back into its sites after many cafes removed sofas, switched to wooden interiors and focused on delivery orders.

Around 70 stores have been redesigned and have already seen an improvement in sales, Niccol added.

Niccol said: “We set a plan. We’re working the plan. The plan is working. We have more work to do we’re building momentum. Regardless of the headwinds and tailwinds we may encounter, I’m confident we have the right team and strategy to deliver long-term sustainable growth.”

Starbucks runs around 520 company-owned sites in the UK in addition to nearly 900 franchise venues.

It is the largest branded coffee chain in the world, with more than 39,000 stores.

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