Starbucks Is Betting on Protein Cold Foam and a 'Sugar Reduction' to Turn Around Lagging Sales. Here's a Look at the Sweeping Changes. Starbucks' CEO Brian Niccol plans to revive sales through a spate of company-wide changes.
By Sherin Shibu Edited by Melissa Malamut
Key Takeaways
- Starbucks is changing its products and improving its services in a push to draw more customers to its stores.
- The coffee chain reported its sixth straight quarter of declining store sales on Tuesday.
- Starbucks CEO Brian Niccol said that the company is on track to turn sales around through improved products and services.
Starbucks reported its sixth consecutive quarter of falling store sales on Tuesday, but the coffee chain's CEO says things are ready to turn around with new products and refined services.
According to Starbucks' latest earnings report for the 13-week period ending June 29, store sales declined by 2% worldwide and in North America, while international store sales remained flat. Net revenue was the bright spot, rising 4% to $9.5 billion for the quarter, a 3% increase compared to the same period last year.
Starbucks CEO Brian Niccol stated in the earnings report that Starbucks, which has over 41,000 stores globally, is on track to turn slumping store sales around — and the company is "ahead of schedule" to make sweeping changes next year.
"In 2026, we'll unleash a wave of innovation that fuels growth, elevates customer service, and ensures everyone experiences the very best of Starbucks," Niccol stated.
Starbucks CEO Brian Niccol. Photo by Robin Marchant/Getty Images
Wall Street was encouraged that Starbucks' turnaround strategy was taking effect, despite declining sales for the quarter. For example, T.D. Cowen analyst Andrew Charles stated in a Wednesday research note that he is more confident that Starbucks' sales will improve because of the company's "more aggressive innovation agenda."
In a call with investors following the report's release, Niccol expanded on how Starbucks is implementing its turnaround strategy. Here are five main points the CEO made.
Adding protein cold foam
Starbucks is jumping on the protein trend, following companies like Pepsi and snack bar company David Protein, by infusing cold foam, a popular add-on, with protein. Niccol told investors on the call that while sales declined overall, cold foam sales grew 23% last quarter, making it one of Starbucks' "most popular modifiers."
He stated that Starbucks will introduce a new protein cold foam by the end of 2025 with 15 grams of protein and no added sugar. In June, reports said the protein cold foam may be banana-flavored.
Starbucks first introduced cold foam, which is made by baristas frothing milk or cream with a handheld frother, in 2014 to its Seattle stores, before expanding the add-on to all cold beverages nationwide in 2018, according to Restaurant Business.
'Sugar reduction' with coconut water-based drinks
Niccol stated on the call that Starbucks has begun testing coconut water-based tea and coffee drinks in select locations in New York, including coconut water matcha and cold brew. Larger, regional tests are soon to follow.
The company said the coconut water-based drinks have one-third the sugar content of a standard Starbucks Berry Lemonade Refresher, with an added boost of electrolytes.
"We've been working on a sugar reduction," Starbucks product development lead Dana Pellicano said in an interview with Bloomberg.
Related: How Long Should a Latte Take to Make? Starbucks Gives Baristas a Time Limit for Crafting Orders
Pellicano additionally stated in the interview that Starbucks is working on creating other sugar-reduced or sugar-free drinks by substituting sugar syrups with other sweeteners, like agave, dates, and coconut.
New food options
Starbucks is focusing on "artisanal food" by revamping its menu with gluten-free and high-protein options that go beyond breakfast.
"We are going to figure out how we get the right food and the right drinks so that we are more relevant in that afternoon occasion," Niccol said on the call with investors.
Starbucks said in February that it would cut 30% of its menu in the U.S by October, the end of the company's fiscal year 2025.
Closing mobile order stores
Starbucks is closing its pick-up-only stores in the U.S. that focused on mobile orders just six years after introducing the concept.
The coffee chain will still offer the option to order via mobile, a service that comprises almost a third of transactions.
The pickup-only locations in the U.S. "lack warmth," Niccol stated on the investor call. There are around 80 to 90 in the U.S. In New York City, some may be converted into 10-seat "small version format" locations, Niccol said.
"We found this format to be overly transactional and lacking the warmth and human connection that defines our brand," Niccol said on the call.
Offering "Green Apron Service"
"Green Apron Service" is a new standard Starbucks is establishing for its baristas to bring a more familiar feel to customer service interactions. Niccol stated on the call with investors that a pilot test of "Green Apron Service" in 1,500 stores resulted in increased sales, transactions, and customer service times.
Starbucks is rolling out the "Green Apron Service" to all U.S. coffee houses by mid-August.
Related: Starbucks Is Changing Its Pricing. Here's What to Know.
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