Previously, he was group president, international and Channel Development where he was responsible for leading Starbucks retail growth and operations in 80 markets across Asia Pacific, Latin America, Europe, Middle East and Africa and growth for the Global Channel Development business which consists of Consumer Packaged Goods (CPG), Ready to Drink (RTD) businesses, as well as strategic partnerships including those with Nestlé, PepsiCo and other key business partners.

Since Conway joined Starbucks in 2013, he has held a range of leadership roles, including EVP and president, Starbucks Canada; EVP and president for Starbucks Licensed Stores business for the United States and Latin America; EVP and president of Starbucks global channel development; and EVP and president, international licensed markets where he was responsible for the growth, development and consistency of operations across more than 8,000 international stores.

In a surprise move last month, Starbucks named Brian Niccol as its new CEO and chairman, replacing Laxman Narasimhan after the company’s comparable sales fell for the second straight quarter this year. Narasimhan was appointed to the position in 2023.

Niccol plans to focus on reinvigorating coffeehouse culture at the chain’s stores in the US. In his first week at the job, Niccol said in an open letter he would initially focus on U.S. stores delivering drinks and food on time and elevating in-store experience for customers in a bid to “reestablish the brand as the community coffeehouse.”

There needs to be a clear distinction between “to-go” and “for-here” services at the stores, the former CEO of Chipotle wrote. Niccol said he would spend time in stores, meeting with suppliers and partners in a bid to improve the company’s supply chain as well as its app and mobile ordering platform.

“In some places – especially in the US – we aren’t always delivering. It can feel transactional, menus can feel overwhelming, product is inconsistent, the wait too long or the handoff too hectic. These moments are opportunities for us to do better,” he added.

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Although we are seeing declining interest rates in the US, Europe and the UK, there are still concerns around the macroeconomic backdrop as inflationary pressures remain and will continue to pose near-term challenges (even plain grocery store coffee beans cost 22% more than three years ago). Hence, consumers are still cautious with their spending, cutting back on foodservice purchases — and even reducing spend on their beloved java from their favourite coffee shops. Declining sales including same-store sales – a result of lower foot traffic – (and a sagging share price) is what led to Starbucks CEO Laxman Narasimhan being forced to step down (Brian Niccol, CEO of Chipotle was named as his successor) as the multinational coffee chain strategizes to turn things around.

Despite the economic uncertainties, consumers – both older and younger consumers – still enjoy purchasing coffee from their favourite coffee shops (some 62% of millennials will still spend up to $7 per day on coffee) because they feel it is a small indulgence, but maybe now not as frequently. Many consumers are no longer purchasing these ‘treats’ daily in efforts to control their spending.

CashNetUSA recently released study identifying the cheapest areas across the United States to buy a cup of coffee. It found the average price of a cup of coffee in local indie cafés and chains and ranked them by state and city and also compared these prices to the average local wage to determine affordability.

Quite surprisingly, Maine has the cheapest coffee while South Dakota – not New York or California – has the most expensive. CashNetUSA revealed that a cup of coffee in South Dakota costs USD $3.79, 45.76% more than in Maine ($2.60), the cheapest state. South Dakota takes over from Washington, which was the most expensive state according to its 2021 report. The cost of coffee in Washington has actually fallen on average. South Dakota’s has jumped by 63.36% from $2.32. Maine is one of 12 states where the average cup costs under $3. These states are mostly towards the Midwest or South of the country.

The study found that at an average of $2.13 per cup, Irving in Texas has the cheapest coffee of any US city. This is also $0.91 cheaper than the average cup across Texas.

The state of Oregon has the fifth-highest average coffee price, at $3.51. Two Oregon cities are the only ones in the US to offer the average coffee cup at a price north of four dollars: Eugene ($4.39) and Salem ($4.16). According to CashNetUSA, these are also two of the least affordable cities when comparing coffee prices with local wages.

Mississippi has the least affordable coffee compared to income. In Mississippi, a cup of coffee costs nearly one-fifth (18.28%) of the average hourly wage. The study found that this is the least affordable coffee of any state, although the average cup in Mississippi is only the 11^th most expensive ($3.30). Massachusetts (where a cup of coffee costs 10.31% of the average hourly wage) has the most affordable average coffee, closely followed by Washington (10.85%).

Olympia, WA, has the most affordable coffee; Eugene, OR, has the least — CashNetUSA reported that it costs just 8.11% of the average hourly wage in Olympia, Washington, to pay for the average cup of coffee. Olympia is followed by three California cities: Oakland (8.33%), San Francisco (8.75%) and San Jose (8.76%). A fourth – Torrance (9.51%) – also makes the top ten most affordable cities for coffee. Eugene, Oregon, is where a cup of coffee costs the biggest chunk of the local average hourly wage (19.59

While national and multinational coffee chains have launched many more promotional offerings this year, particularly this spring and summer, to date, I do not believe any have dropped their prices. But as they battle for consumers’ prized discretionary income, I wonder if they will begin engaging in QSR-like price wars?

For the full CashNetUSA report, click here.

• Vanessa L Facenda, editor, Tea & Coffee Trade Journal.
  Keep in touch via email: vanessa@bellpublishing.com Twitter: @TCTradeJournal or LinkedIn: Tea & Coffee Trade Journal

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Niccol replaces Laxman Narasimhan who is stepping down as CEO and as a director effective immediately. Narasimhan assumed the position of CEO of Starbucks in March 2023, succeeding founder and former CEO and chairman emeritus, Howard Schultz. During his tenure, the company noted that he improved the Starbucks partner experience, drove significant innovation in its supply chain, and enhanced store operations. However, the company has faced significant challenges this year, including declining sales in key markets such as the US and China. Furthermore, the Wall Street Journal reported that Seattle, Washington-based Starbucks is under increasing pressure from activist investors as it also grapples with a sagging share price.

Following the announcement of Niccol as the incoming CEO, shares of Starbucks Corporation (SBUX) jumped 12.8% in premarket action — its highest level since late April, per Seeking Alpha.

Niccol currently serves as chairman and CEO of Chipotle. Since becoming CEO in 2018, Niccol has transformed Chipotle. His focus on people and culture, brand, menu innovation, operational excellence, and digital transformation have set new standards in the industry and driven significant growth and value creation. Revenue has nearly doubled, profits have increased nearly sevenfold, and the stock price has increased by nearly 800% during his leadership, all while increasing wages for retail team members, expanding benefits, and strengthening the culture.

“We are thrilled to welcome Brian to Starbucks. His phenomenal career speaks for itself. Brian is a culture carrier who brings a wealth of experience and a proven track record of driving innovation and growth. Like all of us at Starbucks, he understands that a remarkable customer experience is rooted in an exceptional partner experience,” said Hobson. “Our board believes he will be a transformative leader for our company, our people, and everyone we serve around the world.”

“I am excited to join Starbucks and grateful for the opportunity to help steward this incredible company, alongside hundreds of thousands of devoted partners,” said Niccol. “I have long-admired Starbucks iconic brand, unique culture and commitment to enhancing human connections around the globe. As I embark upon this journey, I am energized by the tremendous potential to drive growth and further enhance the Starbucks experience for our customers and partners, while staying true to our mission and values.”

Niccol joined Chipotle as CEO and a director in March 2018, and became chairman of the board in March 2020. Before joining Chipotle, he served as CEO of Taco Bell. Before becoming CEO there, he held roles including chief marketing and innovation officer, and president. He also served in leadership roles at Pizza Hut, another division of Yum! Brands. He began his career in brand management at Procter & Gamble.

Niccol currently serves on the board of directors of Walmart Inc. He previously served on the board of KB Home and Harley-Davidson. Niccol holds an undergraduate degree from Miami University and an MBA from the University of Chicago Booth School of Business.

“Having followed Brian’s leadership and transformation journey at Chipotle, I’ve long admired his leadership impact. His retail excellence and track record in delivering extraordinary shareholder value recognizes the critical human element it takes to lead a culture and values driven enterprise. I believe he is the leader Starbucks needs at a pivotal moment in its history. He has my respect and full support,” said Schultz. “I thank Mellody and the Starbucks board for their deep commitment to shaping the future of this remarkable global phenomenon that is Starbucks.”

Ruggeri is a 23-year Starbucks partner and has been CFO since 2021.

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