Starbucks suffers worst decline in sales since pandemic shutdown: Starbucks expects to report its worst decline in sales since the pandemic and suspended its annual forecast after global same-store sales fell 7% in the fourth quarter, according to preliminary results published last night (Tuesday, 22 October). Starbucks said suspending its 2025 outlook would give chief executive Brian Niccol more time to diagnose the current problems and develop a plan. The poor performance was led by a 6% decline in comparable sales in the US, its biggest market. In China, same-store sales fell 14% as the coffee store faced intensified competition and a weak economy that impacted consumer spending. Starbucks’ shares tumbled $3.66, or 3.8%, to $93.16 in after-hours trading after the company released the results. The decline in same-store sales represents the sharpest fall since the fourth quarter of 2020, when pandemic lockdowns sent same-store sales down 9%. Overall revenues in the fourth quarter declined 3% to $9.1bn, reports The Times. Shares of the company fell more than 3% in extended trading on the announcement. “Our fourth quarter performance makes it clear that we need to fundamentally change our strategy so we can get back to growth, and that’s exactly what we are doing with our ‘Back to Starbucks’ plan,” Niccol said in a statement. “We believe that our problems are very fixable and that we have significant strengths to build on. People love Starbucks, but I’ve heard from some customers that we've drifted from our core, that we’ve made it harder to be a customer than it should be, and that we’ve stopped communicating with them. As a result, some are visiting less often, and I think today’s results tell that same story. We know how to make these improvements, and when we do, we know customers will visit more often.” Niccol said he will share more details on the steps Starbucks is taking to turn around the business on the company’s earnings call, scheduled for next Wednesday (30 October). He aims to reverse slowing demand for Starbucks’ drinks, starting with its largest market: the US. Already, Niccol said the company is “fundamentally changing” its marketing by refocusing on all of its customers, not just members of its loyalty program. He added that Starbucks plans to simplify its “overly complex menu,” fix its pricing and make sure all its drinks are handed directly to customers – all three have been top complaints from customers and baristas in recent years. The company also increased its dividend from 57 cents to 61 cents per share. “We want to amplify our confidence in the business, and provide some certainty as we drive our turnaround,” chief financial officer Rachel Ruggeri said. “Despite our heightened investments, we were unable to change the trajectory of our traffic decline, resulting in pressures in both our top-line and bottom-line. While our efficiency efforts continued to produce according to plan, they were not enough to outpace the impact of the decline in traffic. We are developing a plan to turn around our business, but it will take time.” The surprise announcement of the company’s preliminary results comes nearly two months ago after Niccol took the helm at Starbucks. He joined Starbucks after six years in the same role at Chipotle, which he led through a turnaround after its foodborne illness crises, invested in its digital business and turned it into a top industry performer. On Friday, the company announced a former Chipotle executive, Tressie Lieberman, will be joining Starbucks as its global chief brand officer, a newly created position. Starbucks features in the Propel UK Food and Beverage Franchisor Database, which is an exhaustive guide to the companies offering a food and beverage franchise in the UK and available exclusively to Premium subscribers. The database is updated every two months and the current version features 270 businesses. A Premium Club subscription costs an annual sum of £495 plus VAT for operators and £595 plus VAT for suppliers. Companies can now have an unlimited number of people receive access to Premium Club for a year for £995 plus VAT – whether they are an operator or supplier. Email kai.kirkman@propelinfo.com today to sign up.