Hot And Cold: Starbucks Has Lost Less Than Expected But How Much Can It Gain?

America’s most famous coffee franchise, Starbucks, has recorded a fall that was smaller than expected in the first quarter comparable sales. This indicates the initial signs of recovery for the coffee corporation, which has been working consistently to revive demand.

Starbucks shares witnessed a 0.5% rise in extended trading and nearly a 30% gain since the appointment of CEO Brian Niccol, who has been credited for the company’s recent growth. According to the London Stock Exchange Group (LSEG), analysts had predicted a fall of 4.6%; however, Niccol’s first full quarter recorded a drop of 4% in global same-store sales, a figure lower than the estimated number.

According to Niccol, Starbucks’ mobile ordering system is one of the main reasons for longer wait times, which also overwhelms baristas. He explained that a more efficient mobile ordering system would not only shorten the wait time but also help the company to eventually double its store count within the US.

Ahead of the reports, Starbucks was expected to report a decline in its fourth straight quarter, having suspended its 2025 forecast in October last year. This was part of the new strategy proposed by Niccol, who not only suggested revamping the mobile ordering system but also suggested implementing a ‘coffee code of conduct’ which would require consumers to make purchases if they wished to use the lavatory or the wi-fi.

The coffee chain had also announced earlier this month that, as part of its turnaround efforts, job cuts were on the horizon. Niccol also added that while further details will be announced in March, the company’s in-store teams and its investments in store hours would remain unaffected. He explained that too many managers and coordinators were slowing down the company and that the size and structures of the support teams would be monitored globally.

Meanwhile, the management is also at loggerheads with the union, which is in the process of trying to organise US baristas as a result of contract negotiations dragging on since last February. In December, which is the busiest month for Starbucks, around 300 stores across the US went on strike in demand of a contract.

Workers United, the union representing Starbucks workers has filed more than 90 unfair labour practices and has accused the franchise’s management of stepping back from ‘the way forward’, which it had jointly agreed to and announced with the union.

While Starbucks may have exceeded expectations marginally, the road ahead is not smooth for the coffee company. The changes in top-level management, job cuts lurking around the corner and changes in several policies which had prioritised customers are bound to affect company shares in the short term. However, the management is working hard to improve demand and drive up sales, confident that looking at the long-run benefits is more important than meeting short-term figures.