In today’s time when customers care more about prices, restaurants like McDonald’s and Taco Bell are offering cheaper deals to attract budget-conscious customers.
But Starbucks is doing something different, which might upset some of its loyal customers. In a shift under new leadership, the coffee giant is cutting back on promotions and discounts, leaning into its premium image instead of offering enticing deals.
Starbucks Cuts Back on Promotions
According to The Wall Street Journal, Starbucks said in September 2024 that it will offer fewer discounts and promotions. The new CEO, Brian Niccol, is making this change because sales are going down and customers are noticing prices going up. Niccol used to work at Chipotle and Taco Bell before taking over at Starbucks.
Promotions and discounts have historically played a role in drawing customers back into Starbucks locations, especially in recent months. The chain used app deals and started a Pairings menu in June 2024.
They offered discounts like a coffee or tea with a croissant for $5 or a breakfast sandwich for $6. But now, with Niccol in charge, they are getting rid of these deals to focus on serving high-quality drinks.
Why Is Starbucks Making This Change?
Starbucks is reducing promotions to improve its business after sales went down for two quarters. The company blames this on people spending less money. Instead of giving discounts to attract people looking for good deals, Niccol wants to focus on Starbucks’ reputation for high-quality coffee & not rely on promotions as much.
Niccol’s philosophy is rooted in maintaining the brand’s image of high-quality products rather than competing on price. During the internal forum, he emphasized that Starbucks should focus on “making a couple of powerful choices” and “executing like crazy.”
This shift marks a departure from previous tactics that relied on promotions to draw in customers, signaling a new chapter for the chain.
Impact on Customers: What to Expect
This new change might not make some customers happy. Starbucks got rid of the Pairings menu and reduced the number of deals in their loyalty program. They may not have many promotions during the holidays, which is when customers usually enjoy seasonal drinks & discounts.
Instead of giving discounts or special deals, Starbucks will concentrate on promoting its seasonal drinks. This means customers can still get their favorite holiday beverages like Peppermint Mocha or Caramel Brulée Latte, but they may not see the usual money-saving offers they’re used to.
Niccol’s Strategy for Reviving Starbucks
Fewer promotions are but one part of a larger, multibrand strategy at Starbucks aimed at making its business better. The head of Starbucks recently wrote the following letter, outlining a strategy to make the customer experience better:
- Delivering accurate and timely orders: Niccol emphasized how important it is for each customer to receive the right order on time. Starbucks wants to make things faster and better to make customers happier.
- Reestablishing Starbucks as a community coffeehouse: Starbucks plans to reinforce its image as a welcoming, community-oriented space where people can gather and enjoy their favorite beverages.
- Supporting baristas with better tools and time: Niccol highlighted the need to ensure that Starbucks employees have the resources and time necessary to provide excellent service to customers. This focus on internal support is expected to improve operations at the store level.
What’s Next for Starbucks?
As Starbucks starts on this new journey with Niccol as the leader, it’s obvious that the brand wants to keep being known for its high-quality coffee shops instead of trying to compete on prices with other chains.
By putting more attention on making customers happy and providing good products, Starbucks wants to bounce back from recent drops in sales and keep getting bigger.
This may, however be unwelcome to a customer who is used to deals and offers. Without any kind of promotions or deals, especially during holidays, might make some wonder whether they should shop elsewhere rather than staying faithful to the brand, as other stores are still promoting good deals.
Final Thoughts
Starbucks is making changes to focus on their high-quality drinks and better customer service instead of offering discounts. Some customers might not like this change, but Starbucks believes it will help them sell more. Fans of Starbucks will now enjoy the premium drinks & updated coffeehouse experience without worrying about finding discounts.
As these changes happen, it will be interesting to see how customers respond and if Starbucks’ fancy way of doing things will work in the busy coffee market.