Starbucks Chairman & CEO Brian Niccol Talks Turnaround Plan

Summary

Bloomberg Talks

Episode: Starbucks Chairman & CEO Brian Chesky Talks Turnaround Plan

Date: October 30, 2025
Host: Bloomberg Interviewer/Analyst
Guest: Brian Chesky, Chairman & CEO of Starbucks

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Overview

This episode features an in-depth interview with Starbucks CEO Brian Chesky on the company’s ongoing turnaround plan, known as the "Back to Starbucks" strategy. Chesky discusses operational improvements, store and service innovation, new product platforms, shifting market dynamics, and international expansion—with a focus on the strategic steps taken to reignite growth and performance at Starbucks, especially in North America and China.

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Key Discussion Points & Insights

1. Turnaround Momentum & "Back to Starbucks" (00:23–02:03)

• The recent quarter is described as a "critical moment" in Starbucks’ turnaround. The "Back to Starbucks" plan and introduction of the Green Apron service standard resulted in transaction increases and positive comparable sales in September and October.
• Operational improvements included increased staffing, more hours for baristas, a better in-store customer experience, and productivity gains.
• International performance was highlighted, with strong quarters in Canada and China (the latter seeing its second consecutive quarter of comps growth).

Brian Chesky (00:48):
"Once we got the Green Apron service standard into the business, we saw a lot of really good things happen... our partners were set up with bigger rosters, more hours, and they were able to give customers better connection, great craft products, which then translated into transaction increases."

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2. Staffing, Training & Operational Focus (02:03–03:35)

• Baristas and staff have embraced the new strategy, expressing appreciation for renewed focus on core coffeehouse values and empowered work environments.
• Staffing increases and training are key; backed by efficient onboarding and targeted service expectations ("great greeting," "great handoff," comfortable seating).
• Technology supports better order management behind the scenes, including drive-through, mobile, and café orders.

Brian Chesky (02:20):
"Our baristas and partners... love having the moments of connection with our customers and our customers love it as well."

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3. Store Design, Uplifts & Cost Strategy (03:35–05:45)

• Starbucks aims to modernize interiors for comfort and efficiency. The approach balances strong design with cost controls.
• "Coffeehouse uplifts" are rapidly implemented overnight, significantly enhancing the customer experience without store closures.
• Goal for the year: more than 1,000 store uplifts out of 10,000+ company-operated locations, with scalability in future years.
• New stores are being designed with updated packages from the outset.

Brian Chesky (03:57):
"You can have great design, you can have a great seat, you can have a great atmosphere and then also be very cost conscious. And that's what we're doing here."

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4. Margins, Restructuring & Investor Outlook (05:45–07:46)

• Acknowledges restructuring costs but emphasizes belief in margin recovery through topline growth and higher transaction profitability.
• Chesky champions a continuous improvement culture and assures investors of returning to pre-COVID earnings performance.
• Guidance about long-term growth and margin improvement will be detailed at the January investor day, not before.

Brian Chesky (05:59):
"I see no reason why we can't get back to earning what we used to earn, even pre Covid. So I'm very optimistic for where we can get to on the bottom line."

Brian Chesky (07:06):
"It is about where we are three years from now... we want to use this investor day to really give people guidance on where we see this business growing in the future."

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5. Product Innovation: The Protein Platform (07:46–09:12)

• Launch of “protein cold foam” and related products have seen incremental sales.
• Notable lift in frequency among lower-frequency rewards customers.
• Over 90% of drinks can now have protein added—aligning with customer health/wellness trends and personalization demands.
• Early figures show protein drinks are encouraging repeat purchases and even driving more afternoon visits.

Brian Chesky (08:07):
"We're early days in the protein platform, but it's proving to be very incremental, which is terrific to see... over 90% of the drinks now you can get protein added."

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6. Competition & Pricing (09:12–10:38)

• Starbucks recognizes new competitors (Dutch Bros, Seven Brew, Luckin Coffee, etc.) but maintains its premium positioning.
• Scale and operational breadth (drive-thru, mobile, delivery, café) reinforce value proposition.
• Focus: Differentiating by customer experience and service rather than price wars.

Brian Chesky (09:36):
"We have to be on the offense, we have to recognize the scale that we have and then we have to do the customer experience better than anybody else. And we are after being the world's greatest customer service company."

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7. International Strategy & China Expansion (10:38–12:08)

• China has strong momentum with two consecutive quarters of comp growth.
• Starbucks plans a major partnership (pending) with a private equity firm to accelerate store growth from 8,000 to potentially 15,000–20,000, targeting deep expansion into lower-tier cities.
• Expected to finalize the deal soon; timing before the January investor day is possible but not guaranteed.

Brian Chesky (11:04):
"China is a tremendous growth opportunity... partners... are excited about getting this brand to go from 8,000 stores to 15, 20,000 stores."

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Notable Quotes & Memorable Moments

• On service transformation:
  "We're getting back to being a Great coffeehouse. Again, our baristas and partners, they love doing the craft, they love having the moments of connection with our customers..." — Brian Chesky (02:20)

• On balancing cost and ambiance:
  "You can have great design... and also be very cost conscious." — Brian Chesky (03:57)

• On competitive advantage:
  "We are after being the world's greatest customer service company." — Brian Chesky (09:36)

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Important Timestamps

| Segment | Timestamp | |----------------------------------------|-------------| | Turnaround plan & service strategy | 00:23–02:03 | | Staffing & partner engagement | 02:03–03:35 | | Store design/coffeehouse uplifts | 03:35–05:45 | | Margins, restructuring, earnings | 05:45–07:46 | | Product innovation (protein drinks) | 07:46–09:12 | | Competition & pricing | 09:12–10:38 | | China expansion/international strategy | 10:38–12:08 |

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Conclusion

Brian Chesky presents a candid and optimistic outlook for Starbucks, centered on operational excellence, authentic service, rapid innovation, and bold expansion plans—particularly in China. Investors and employees alike are assured of sustained transformation, measurable progress, and long-term strategic focus, with significant milestones (including updated guidance and international deals) expected to be detailed at the January investor day.

Transcript

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[Interviewer / Analyst]

All right, Brian, congratulations on the recent quarter. Obviously, investors had been looking for some sort of sense that there would be a return to growth under your leadership. In the 13 months that you've been on the job, 1% on a same store sales basis, do you have confidence that the performance that you saw in your fiscal fourth quarter is not only going to be repeatable, but more importantly, something that you can build on for the current quarter and beyond?

[Brian Chesky (Starbucks CEO)]

Yeah, remain great to be here and absolutely. We believe this was a critical moment in our turnaround plan of the Back to Starbucks strategy. You know, it was great to see. Once we got the Green Apron service standard into the business, we saw a lot of really good things happen. You know, most specifically, our partners were set up with bigger rosters, more hours, and they were able to give customers better connection, great craft products, which then translated into transaction increases as you saw in September. We have positive comps driven by those transaction gains that continued into October. And we believe we can build from here because we've got a strong operational footing and really excited about what we've got coming for holiday. So we think it was a critical moment in the fourth quarter for the turnaround of the U.S. business. And when you think about North America, the thing that's great is Canada had a great quarter as well. They were, you know, low mid single digit comp growth driven by transactions as well. And they've done a really great job there. And then when you look around the world, we had terrific successes in many markets and most notably, China had its second consecutive quarter of comp growth. So it was, it was a critical moment for us and we're optimistic about where we go from here.

[Interviewer / Analyst]

You've put a lot of emphasis on service, obviously with the Green Apron project. What does that look like in terms of staffing though? I mean, you obviously have to hire more people, but more importantly, you have to retrain a lot of your existing staff as well. How, I guess receptive have they been to that and have you faced any challenges?

[Brian Chesky (Starbucks CEO)]

You know, I got to give our partners a lot of credit. They really have embraced both the Back to Starbucks strategy and the Green Apron service standard. And when I'm in stores, you know, what I hear from folks is like, thank you. We're getting back to being a Great coffeehouse. Again, our baristas and partners, they love doing the craft, they love having the moments of connection with our customers and our customers love it as well. And so the fact that we've staffed the stores up and we've added more people, we've added more hours, it actually has set them up to be able to do their job, I think with excellence. And you know, it's always terrific to be able to hire more people. And when you've got great leaders in the stores, they're able to train the new people, I think, really quickly. And we've tried to keep this very focused on what we're looking for. Right. We want a great greeting when people walk in, we want a great experience at the handoff. We're working on doing these uplifts. So then our customers have great seats if they decide to stay. And we've put some technology in behind the scenes to help put order to all those orders coming in, whether it's through the drive thru mobile order or in the cafe. So, you know, we're seeing great responses from our partners and I couldn't be prouder of the progress they've made in really short order. You know, we've only been doing this since the middle of August.

[Interviewer / Analyst]

Yeah. And with regards to the actual physical Starbucks locations, I mean there are a lot of layers to what you're doing here. One, obviously trying to make the, the interiors a little bit more accommodating and comfortable, but at the same time also efficient. You're also looking to sort of create more, I guess, lower cost models for building and operating some of these locations. Are those two in conflict with each other, those strategies?

[Brian Chesky (Starbucks CEO)]

No, actually they can work really well together. You can have great design, you can have a great seat, you can have a great atmosphere and then also be very cost conscious. And that's what we're doing here is we want to make sure all our base costs go into giving the partner the back of house they need to be successful. And then the customer the front of house experience where they love being in our coffee houses. And so that's what we're doing. You know, these coffeehouse uplifts, we're able to turn these around in a night or two. We don't have to close the store. And the transformation is meaningful. You know, the feedback we're getting from customers is really, really positive both on the design as well as just the whole atmosphere, the vibe that they're getting. And I think the combination of the Green Apron service with this coffeehouse uplift Just really gets people to a different place and they believe now they're getting that Starbucks experience that frankly you don't get anywhere else.

[Interviewer / Analyst]

How much will the pace of those uplifts pick up? I mean, you've only done a few dozen stores at least in the most recent quarter here. I mean, you've got more than 10,000 company operated locations right here in North America. So when do we start to see the other thousands of locations get that uplift?

[Brian Chesky (Starbucks CEO)]

Yeah, so we've done about 70 so far and we are focused on this fiscal year getting, getting over a thousand done. And the good news is once we get that scale operation going, we build know how we will be able to then hopefully accelerate the build schedule accordingly into the out years because we would love to touch all the stores that need it. And then the good news is too, as we build new stores going forward, we're building the new stores with the right design package, the right experience. So we have some work to do with our existing coffee houses. But I'm optimistic we will demonstrate that we're able to do this at scale and then we'll build on our ability to do thousands of stores going forward.

[Interviewer / Analyst]

There is still cost involved in this. You had a restructuring charge in the most recent quarter. The sales growth is coming back. There are still some concerns about whether margins could be under pressure. As you go through this transition, what do you tell investors who ask that question?

[Brian Chesky (Starbucks CEO)]

Yeah, look, I think the margins will follow the, the top line success. And I see no reason why we can't get back to earning what we used to earn, even pre Covid. So I'm very optimistic for where we can get to on the bottom line. You know, kind of the way we've talked about it is our future is we're going to have more transactions, a bigger business, and every transaction is going to be more profitable than it currently is today. I love the fact that our culture has really adopted this mantra of we're going to be better tomorrow than we were today. And the same thing is true on the bottom line. So that's where we're headed. And I'm confident as we continue to put transactions into the business, customers continue to experience the Starbucks experience. They see the tremendous value it will flow to the bottom line and it will reward everybody accordingly.

[Interviewer / Analyst]

You seem confident. You seem optimistic. I am curious as to why you didn't feel it was appropriate yesterday with regards to the earnings release in the call to reinstate some sort of guidance. I know your CFO Kathy Smith said you would probably do that in January at an investor day. But, but why not now?

[Brian Chesky (Starbucks CEO)]

You know, we basically believe we want to do it at the investor day so that we can give people a comprehensive look of where we're going, not just for the fiscal year 26, but rather a long term look on how we're resetting this business up for success. You know, I believe the reason why I'm here, why our leadership team is, is here, is not about what happens next week or frankly next month. It is about where we are three years from now. So I'm optimistic about what's going to happen in the short term. But we want to use this investor day to really give people guidance on where we see this business growing in the future. So. So we'll see everybody in late January and I think we've got a great story to share with people and I look forward to seeing people there.

[Interviewer / Analyst]

I want to talk about the coffee and the food. Obviously one of the biggest buzz right now around Starbucks is the add on foam protein. I am curious. I mean, obviously it's in the zeitgeist, but is there any way you can articulate whether it's actually been accretive with regards to sales and the bottom line? I mean, what do transactions look like for those protein drinks?

[Brian Chesky (Starbucks CEO)]

Yeah, so we're early days in the protein platform, but it's proving to be very incremental, which is terrific to see. One of the best early indicators is our rewards. Customers that had some low frequency, we're seeing their frequency pick up. We're also seeing our awareness build. And as the awareness builds and we see people try, whether it's a protein cold foam or the protein latte execution, we see them actually loving it and coming back and doing more often and in some cases even doing it in the afternoon. So they may get a different experience in the morning and then they come in in the afternoon and get the protein latte solution. So we're, we're looking really promising on this protein platform. Obviously we'll learn a lot, we'll listen to what customers say. But you know, I love the fact that over 90% of the drinks now you can get protein added. And it's very much on trend with how people want to eat and drink. And so look, I think this is a piece of Starbucks getting into the right health and wellness frame of reference. Right. And then also giving customers the personalization that they want around protein.

[Interviewer / Analyst]

I am curious about price, particularly in light of some upstart competitors that have come into this space like Dutch Bros as well as seven Brew, Luckin Coffee and a few others here. Do you feel like you need to compete with those names on price or can you sort of maintain this sort of a relative premium or luxury model that I think Starbucks has had a perception of being.

[Brian Chesky (Starbucks CEO)]

Yeah, look, we're always going to compete, okay? And one of the things that I love is we're competing from a position of strength. And that strength comes from the fact that, you know, one thing I like to remind people is we are the biggest coffee drive thru business. We are the biggest mobile order or digital coffee business now I think we're also the biggest delivery coffee business. And then obviously we are the biggest cafe coffee business. And when we provide people the experience, meaning the connection, the community aspect, the humanity of Starbucks combined with the craft of our coffee and the personalization, we see customers saying this is tremendous value and it is well worth it. And so I always say to our team, like we have to be on the offense, we have to recognize the scale that we have and then we have to do the customer experience better than anybody else. And we are after being the world's greatest customer service company. And I think that's a place, place of strength when you, you know, compare a lot of the other competitors that you mentioned.

[Interviewer / Analyst]

Before I let you go, Brian, I do want to ask you a little bit more about international strategy, particularly with regards to China. Starbucks has had a footprint there since at least the late 1990s. Bloomberg reported this week that you were close to finalizing a deal for a partnership with a private equity firm that would allow you to expand your footprint in China even further. How much further do you want to go with that and how far along are you in sealing that partnership?

[Brian Chesky (Starbucks CEO)]

Yeah, look, I'm really excited for our China business. You know, they've had two consecutive quarters of comp growth. The team, I think, is really doing a great job of listening to customers reacting and building on the strength of the Starbucks brand as it relates to finding a partner for our China business. This process I think is really, I think validated what I knew, which is China is a tremendous growth opportunity. And the process has also demonstrated to us that the partners that we were fortunate that came to the table are excited about getting this brand to go from 8,000 stores to 15, 20,000 stores. And their expertise is in the local China market, I think is going to help our team get into those tier 3, 4 or 5 cities faster and with the right execution so that we are able to build on this positive momentum, momentum that we have so I'm looking forward to wrapping up the process and I'm looking forward to our China team being 100% focused on just growing that business into the future in a big way.

[Interviewer / Analyst]

You think wrapping up that process will happen before the investor day in January?

[Brian Chesky (Starbucks CEO)]

You know, you never know on the timing on these things but you know I love the partners that we're working with and I'm optimistic that we're going to get this deal done in the not too distant future.

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