Starbucks is scaling back promotional offers through its mobile app and instead wants more of its customers to pay full price for its coffees and teas, according to CNN Business. The move is “part of new CEO Brian Niccol’s strategy to reposition Starbucks as a premium brand while also reducing the strain on employees, who get flooded with work when promotions are high,” reported CNN Business.
Some of the promotions the company offered in September included extra loyalty points on Tuesdays and deals on several drink purchases on Saturdays. CNN said this was a shift from deeper discounts that spanned many months earlier this year, like buy one, get one free and 50% off deals.
Starbucks also isn’t planning to run broad offers during the holiday season, and instead aims to promote seasonal drinks through advertising, according to The Wall Street Journal.
“In the past, Starbucks had mostly avoided coffee promotions but ramped them up earlier this year to lure back customers. It’s now reversing that strategy—one of the first major moves under Niccol, who took over in September. Starbucks’ sales have fallen for two straight quarters,” said CNN Business.
Infrequent customers that typically visit in the afternoons and customers ages 18 to 29 have drifted away from Starbucks recently, Bank of America analysts said in a research note.
Niccol wants to make Starbucks “a coffee shop again, not just an online-driven business.” Niccol said in a letter last month to employees and customers that he wants to return Starbucks to its roots as a ‘community coffeehouse’ with comfortable seats, improved design and a clear distinction between ‘to-go’ and ‘for-here’ service,” reported CNN.
“There’s a shared sense that we have drifted from our core,” he said. “We’re committed to elevating the in-store experience—ensuring our spaces reflect the sights, smells and sounds that define Starbucks.”
Over the summer, Starbucks had launched a Pairings Menu, which combined a drink and a breakfast item for a discount. Starbucks is still one of the top snack chains on the market, with QSR Magazine’s Top Fast-Food Snack Chains research showing that Starbucks is further ahead than much of its snack competition. In 2023, Starbucks opened 473 new units compared to 2022, and had a total unit number of 16,346 in 2023, helping it earn the first-place ranking.
In the September 2024 edition of NACS Magazine, NACS explored growing coffee trends.
“Today’s trend is cold beverages,” said Tim Cox, marketing manager for Franke Coffee Systems Americas. “Most coffee consumed is still hot, but cold drinks have seen tremendous growth since 2020, largely driven by younger millennial and Gen Z consumers. Cold coffee used to be a spring and summer drink, but now consumers enjoy cold coffee year-round.”
In addition, younger consumers are becoming coffee drinkers at an earlier age.
“Gen Z customers started drinking coffee at the youngest age of all generations—as young as 14 years old, according to Statista,” said Drew Whitefield, senior category manager of hot and cold coffee for 7-Eleven. “Cold coffee—both cold brew and iced specialty—is the most popular when it comes to young consumers.”
To read more from this edition of NACS Magazine, click here.