Brian Niccol:
The feedback I heard was we’ve made the job more complicated than necessary. And then I heard from the customers, a little bit of the Starbucks experience feels like it’s getting taken away from me. So it was a little bit of like, how do we just get back to the basics of Starbucks?

Andrew Edgecliffe-Johnson:
Today on CEO Signal, we’re talking to Brian Niccol, CEO of Starbucks, one of the most high profile brands and one of the biggest turnaround challenges in global business.

Penny Pritzker:
He came to Starbucks after leading a successful turnaround at Chipotle. Now he’s applying that playbook at a global scale.

Andrew Edgecliffe-Johnson:
At this scale, leadership shows up, not just in the big picture strategy, but in the details. From Semafor, this is The CEO Signal.

Penny Pritzker:
Hello, Edge. It’s good to be starting with our first episode of CEO Signal.

Andrew Edgecliffe-Johnson:
Great to be with you, Penny, and it feels very appropriate to be starting off with a real iconic case study of one of the most interesting turnaround challenges in global business right now. So Starbucks, everybody knows. I’ve followed it as a journalist for many, many years. And one of the things you realize when you spend any time at Starbucks headquarters is that everybody is deeply, deeply caffeinated. So I remember one trip a couple of years ago where I met a senior executive who told me that she was nine shots of espresso into her day by the time we sat down. What about you? What’s your engagement with Starbucks been over the years?

Penny Pritzker:
Well, I’m a huge customer of Starbucks. I go frequently. But I hate to disappoint you. I’m a decaf girl. So I like my coffee straight, but no caffeine.

Andrew Edgecliffe-Johnson:
Very wise. One of the things that interests me most about this story is he has really anchored his strategy in frontline customer service. And you grew up in this world. You grew up in a customer facing business, the Hyatt Hotels world. What have you learned from that about what it takes to do great customer service at scale, which is really the challenge that Brian faces here?

Penny Pritzker:
I think one of the challenges is to be able to, first of all, motivate and excite your frontline workforce, to recognize how important their engagement with the customer is, how impactful it is about the experience. And so that’s something that has to come very personally from the CEO and the leadership. I think another challenge is how do you make changes at scale? And how do you do it today in a day when social media is everywhere, and you’re experimenting in your stores? Do you get a chance to try things and adjust, or are you held accountable from moment one?

Andrew Edgecliffe-Johnson:
There’s a lot of pressure, a lot of scrutiny. Let’s bring Brian in to see how he answers those questions.

Penny Pritzker:
So Brian, thanks for having us to Starbucks offices. It’s great to be here.

Brian Niccol:
Yeah. Great to have you guys here.

Andrew Edgecliffe-Johnson:
How’s your coffee order changed since taking this job?

Brian Niccol:
It has, although one piece has stayed the same. I still always get an Americano. But now I definitely in the afternoon bounce around a little bit more between matchas and cortados and cold brew.

Andrew Edgecliffe-Johnson:
So you’ve spent your career in businesses where the frontline is the brand. Was there an early frontline job you did that gave you a feel for that?

Brian Niccol:
Yeah. So early in your life, you don’t realize some of the jobs you take, and how they ultimately kind of stay with you. But I had a couple jobs as a teenager. I worked with a couple guys doing a lawn mowing business. And also when I was a younger kid, we used to live in Philadelphia, and so it would snow. I grabbed my snow shovel, go knock door to door to shovel driveways and sidewalks for $10, which at the time, now that I’m thinking about, I way undercharged.

Andrew Edgecliffe-Johnson:
You learned more about pricing as you were working on the price.

Brian Niccol:
I learned more about pricing since then. And so you got to experience firsthand what providing customer service is like.

Penny Pritzker:
I know for me, early on in my life, I was in high school, I worked at the front desk of a hotel. You learn so much when you’re face-to-face with a customer. And back then, the front desk was kind of the nerve center of the hotel. That’s where you went to either check in, check out, complain, whatever. That’s where the phone calls came to. And you learned a lot about people and how to help people who are frustrated.

Brian Niccol:
Yeah. You saw when people are in a good mood and not a great mood, right?

Penny Pritzker:
Exactly, exactly. But I think it really informs so much about then how, at least for me, I think about engaging with people even throughout my career. I don’t know if that’s true for you.

Brian Niccol:
No, 100%. One of the jobs I didn’t mention, I think I was probably 15, or not quite 16 yet, and I worked in the bag room of a golf shop. And I also picked the range balls up driving the cart. And what was fascinating is you just meet all kinds of people. And the customer service business is tough. But in the end, you can have a real influence on people on the experience you ultimately provide and how you choose to react to the situation. And I think that’s just something I’ve carried on throughout my whole career where it’s like, really matters.

Penny Pritzker:
Yep. I think it’s great training. So you’ve had a habit of stepping into roles that maybe a lot of people might have actively avoided. You took over Chipotle after food poisoning or came to Starbucks when investors were not so happy with how the company was performing. My husband often says I’m a kind of person who runs towards a fire. It feels to me like you have somewhat of a similar bent. Where’s that instinct come from?

Brian Niccol:
That’s a good question. And I’d be curious to hear why you’ve maybe chosen the paths you’ve chosen. For myself, it’s interesting. When I started my career at Proctor & Gamble, probably the first time I had that opportunity was on the Pringles brand. I became the brand manager of Pringles. And Pringles was struggling. But the gentleman that was the general manager was this guy, Jamie Egasti. And one, I thought he was terrific. And two, I thought I could make a difference. I was like, it’s one thing to go in a business that’s performing and kind of just hold onto the steering wheel kind of thing versus, well, we got to turn this around. And that was my first opportunity.

Penny Pritzker:
When you roll up your shirt sleeves with people you respect and you’re really trying to sort out how do I improve this situation and get to the right answer, it’s such a fulfilling thing.

Brian Niccol:
It really is. And that’s the thing that I’ve learned over time is in all these businesses where you have a turnaround, you got to get the right people at the table with you, and they just have to be truly people that are excited about the challenge.

Andrew Edgecliffe-Johnson:
So you’ve built this energized core team, but you’ve been very clear as well that what’s going to make this strategy stick is how the brand shows up at the frontline level when Penny goes in five times a week for her coffee. How do you build that kind of connection and credibility with the frontline employees, partners as you call them, when they’re going to be so critical to the expression of that strategy?

Brian Niccol:
Yeah. Look, I think one of the things when I got to Starbucks that I realized is I feel like we’d lost connection from the corporate office to the actual store with the partner and the customer experience. And so even before I started the job, I had about a month, month and a half where I literally just went to our Starbucks multiple times a day because I wanted to see what was happening in the morning, afternoon, close, open. And I could bounce around a couple stores before people realized I was the CEO kind of thing.
And it was really illuminating because you can talk to customers in that environment and you can also talk to the partners in that environment. And the feedback I heard was, we’ve made the job more complicated than necessary. And then I heard from the customers, a little bit of the Starbucks experience feels like it’s getting taken away from me. And when you start to dig into it’s like, well, what do you mean by that? They’re like, “Well, the seats used to be more comfortable. There used to be more outlets. The partners used to have time to recognize me.” And then when you talk to the partners, they were like, “Look, it’s simple things. Why haven’t we put the condiment bar back out for people to do their own kind of cream and sugar? Why are we making some of these things harder than they need to be?”
And then there was also this element of, I think we got really focused on trying to be efficient and run it like a manufacturing facility as opposed to recognizing, no, no, this is actually a customer service experience where we do great craft and create great drinks for people on time. And so it was one of those things where it’s like, we got to get back to focusing decisions that actually show up in the store. And then you got to understand how those decisions actually are executed in the store.

Andrew Edgecliffe-Johnson:
So you encapsulated what was needed in this very simply articulated strategy that you had to get back to Starbucks.

Brian Niccol:
I felt like we had stopped focusing on those constants in the business and those core elements that make Starbucks Starbucks. So there was a little bit of like, how do we just get back to the basics of Starbucks? And I kind of came up with the catchphrase of, “Hey, we need to get back to Starbucks so that ultimately people experience the best of Starbucks.”
And really what that is saying is it’s a back to basic strategy. The thing that I did not anticipate is how quickly that was understood by our partners in the store. Because once I said to them back to Starbucks, they’re like, “Oh, I know what you mean by that.” It almost resonated faster with our store level employee than it did in our corporate office. Because I think for some people in the corporate office, it challenged a lot of work that they were doing. Because they realized it was in conflict with creating a great coffee house experience. And if you aren’t working on initiatives that ultimately make the store experience better for our customer and our partner, we’re probably working on the wrong things.

Andrew Edgecliffe-Johnson:
So can you bring us up to speed? Where are we in the execution of that strategy now? What do you see?

Brian Niccol:
Yeah, look, we are in the phase of scaling some key components. Our Green Apron Service program is probably the most critical piece. There’s also a technology program called Smart Queue, which is all about queuing production between all the channels that we operate in. And then obviously the marketing and menu innovation, we’re also scaling as well. And then when you layer on top of that, the ability to service the drive-through, mobile order pickup, delivery, as well as the cafe, through this production technology behind the scenes, it looks like we’ve got the right flywheel moving.

Penny Pritzker:
So when you walk in and you’re like, okay, we have to get back to our core, where’d you start?

Brian Niccol:
Yeah, that’s a great question. One of the things I’ve done in all these businesses, and hopefully if you talk to folks that work with me, is I’d like to keep it simple. You can solve complex problems with really simple solutions. And the thing that’s important is you got to figure out what are the simple things we can actually address and we can control.
And so I wanted some things that were very visible and tangible quickly to signal things are changing. So like putting the condiment bar back, letting people have for here ware. We changed the code of conduct so that the store was for customers. I said, “Turn on all the outlets.” These were just simple things to say, “We’re going to be a coffee house.” So that was a decision. I was like, “I’m not debating that. We’re going to be a coffee house. Go put all those elements in as fast as we can.”
Then the other things where it’s like the Smart Queue, the Green Apron Service, that ended up being close to a $600 million investment. We had to walk our way into that to make sure we were doing it correctly. But this is where I love the idea of learning. I think keep it simple, be committed to the idea of the learning process, and then take action. And maybe that’s what people are seeing. Once I get the feedback, I’m like, “Stop debating. Let’s do it.”

Andrew Edgecliffe-Johnson:
So we’ve talked about your instinct to step into difficult situations. And one of the things that seems to have got you this job at Starbucks is the turnaround job you did in the previous role at Chipotle. You walked in there after a really serious crisis that hit the company, food poisoning crisis. What did you see in that situation that maybe others missed that made you think it was worth you taking that on?

Brian Niccol:
Look, at the end of the day, I was a customer, and I thought it was a great brand and I thought it had a differentiated product solution, this idea of clean, culinary forward food done fast and affordable. And I was like, that’s how people want to eat. That’s the trend. That’s got to work. So I just believed it because partly I think that’s what I also thought was the right solution for where the food industry was going to be headed.

Penny Pritzker:
But things were going pretty well at Taco Bell and Yum, big company. You’d had a lot of time there and a lot of experience. When you were making the decision, what were you thinking about? What am I walking away from? What am I giving up maybe personally or professionally to run to the challenge, if you will? And how’d you think about it and who helped you think about it?

Brian Niccol:
The one thing that’s tough is, as you get higher into these jobs, there’s less and less people you can talk to when you’re contemplating making a change. And in that case, great team at Taco Bell, on a great roll, frankly, a great company with Yum, and potentially opportunity for me to even grow more there. But it was one of those things where I was like, if I didn’t take that chance on Chipotle, I think I would’ve been watching from the sidelines, kind of saying, ah, I should have done that.
And so I’m pretty lucky, my wife, Jen, she’s world-class and she can always tell like, “It seems like you want to do this. You should just go for it.” And so it is always helpful when you got somebody close to you saying, “Yeah, go for it. You’re totally set up to be successful at this. And what’s the worst case that happens? It doesn’t work, and we’ll figure out what we do next.”

Penny Pritzker:
We do something else now.

Brian Niccol:
Yeah. And so that was kind of the mentality of it.

Andrew Edgecliffe-Johnson:
So when you look back at that chapter, we can look at the Chipotle stock price chart under your leadership, it was an extraordinary turnaround, a lot of value created. When you think back, what do you consider to have been the most important moves you made, particularly early on, to set that in train?

Brian Niccol:
Not surprising. It was, I think, just having clarity on what was the work we needed to go do. So really kind of boiled down what are the critical few things we need to go do. And oddly enough, back then, we didn’t have a real digital business. And I just saw that as a tremendous opportunity to create the Chipotle app, this digital business. Fortunately for us, there was an operator early, early days at Chipotle that realized big orders needed a separate line from the frontline. So they already had the second line that we, originally, it was called the fax line. So then now I’m kind of dating myself here. So it was for faxing in large orders. And we were like, okay, as a team, we said, let’s remove the fax machines and make these digital makelines. And oddly enough, we removed the last fax machine and I think put in the last kind of digital makeline right around December of 2019, January of 2020. So we got kind of lucky because COVID then happened March 2020, and our digital business went from 4 or 5% to the business.

Andrew Edgecliffe-Johnson:
How many faxes were still coming in in 2019?

Brian Niccol:
Oddly enough, there was still some because it was just when your customer is trained that that’s the experience, it’s hard to break that behavior. And so for large orders, it was coming in that way. Not nearly the way it was before. So they had this hidden asset that we were able to unlock into the digital business. And then also we had to do some things just making sure that the supply chain was tight because we have to deliver fresh food and then we had to do some menu innovation work.
But then it was also, look, getting the right team in place, the right folks in the right jobs to help us grow that business. And I think we assembled a great team. Actually, one of the things that was difficult about leaving Taco Bell or leaving Chipotle was leaving the people, to be really honest with you. It was like when you really get down to it, I’m like, oh, I really like working with these people. And so then you’re like, well, I think I can create another great team and it’ll be equally as exciting.

Andrew Edgecliffe-Johnson:
And you’ve mixed in people you’ve worked with before to this new team at Starbucks.

Brian Niccol:
I have. Yes.

Andrew Edgecliffe-Johnson:
How do you think about that kind of building the new team and what you’re looking for in terms of people you’ve trusted in previous roles, people who understand the company you’ve just moved into?

Brian Niccol:
Yeah. Look, part of the reason why I think it’s important when you’re stepping into these roles, especially if you’re going to be the CEO level, you got to get some people quickly on the team that are going to tell you the truth, and be just brutally honest with you on what’s working, what’s not working. And so I always try to get a team that’s got people that have had some time with the company, but I can see they’re bought into the culture and the change that we’re trying to make. I like bringing in some new people that are completely new. And then I also like getting two or three people that I’ve got history with that I know I instantly will have rapport with where they can be brutally honest with what’s working and not working. Otherwise, you can find yourself really lonely in these jobs, and that’s not where you want to be, especially when you’re trying to turn something around.

Penny Pritzker:
When you joined Starbucks, the company was under a lot of pressure. Operational issues, as you said, product issues, labor issues, growth issues, and huge 40,000 stores at that time, maybe 380,000 employees. Scale is different.

Brian Niccol:
I’m wondering why I took the job.

Penny Pritzker:
No, no, no. I think I get it. You like to run to that fire, but you’ve been in the role now a year. Where are the pressures and tensions today? Stores, people, marketing?

Brian Niccol:
Yeah. Look, I think there’s always going to be pressure on the business to make sure that you’re staying relevant in culture and leading culture. That pressure’s always going to be there. And then I think there’s always pressure on, are we doing the best we can at the core elements of our business? Meaning, do we have the right equipment? And then there’s obviously technology, supply chain. The demands now on having that flexibility in your supply chain where you can come out with, whether it’s a new drink or a new food on the cycle that people expect or want to experience, puts a lot of new pressure on the business. And we’re still working through how we evolve our supply chain so that it can support that scenario. Because it’s a really simple belief. I’m like, if we’re going to put it on the menu, we’ve got to be in stock.
And so the thing I like about it though is I feel like these are pressures from a position now of strength and knowing what we need to go do. Versus when I first got here, I felt like we were very defensive, and it was a little bit of like, what are we supposed to do? So many things are changing on us. What do we need to do?
And even on the job front, I made an early decision, we’re going to be 90% promote within. We didn’t have clarity of that for our partners. I think it’s really important to be crystal clear. We’re going to develop our people. You can have a career here. The standards though are going to be the standards, and you’re going to be accountable to hit those standards. If you buy into that, you believe in the mission and values, we’re going to promote within. We’re going to be a company that people are going to want to know. I say this all the time, folks, we should be the benchmark for customer service. People are like, “How do you know when you’re getting there?” I’m like, “When somebody calls us to say, ‘Hey, I’d love to meet with you because I want to understand how you do customer service,’” I’m like, “Now we’re where we need to be.”

Andrew Edgecliffe-Johnson:
So I’m curious, it’s very tempting to think because you did a turnaround at Chipotle and the Starbucks challenge was a turnaround challenge too, you’re kind of repeating a playbook, but how much of this is just totally different because it’s in the Starbucks setting?

Brian Niccol:
Look, one of the things that’s totally different that I probably underestimated is just the frequency of our customer. You mentioned you come quite a bit, Penny, and people are coming 200 times in a year, 19 times in a month, four times a week. They may come in the morning and the afternoon. And so that was a real difference.
And also, I will tell you too, the ritual aspect of it is real. I stopped at the store here this morning, and frankly, there were probably six people that are always the same six people. If you’re there before 7:00 AM, they’re there. And it’s pretty amazing to see the ritual side of this. And then also the other side of this too is just the moment of connection, how important that is. I’ve never had that in a business. That handoff experience, or even the connection while the person’s making your drink behind the espresso machine, it’s so powerful.
Some people at first were like, “Why are you focusing on the cafe and the community aspect of this? It’s all going to be digital. People are on the go. Nobody even wants to get out of their car anymore.” And I was like, I just disagree. When you look around the world, these places for community have existed forever. I just happened to be on a family trip in Rome. The Spanish Steps, everybody’s sitting at the Spanish Steps with a cup of coffee. It’s like the world’s biggest coffee house right there.
And if you can recreate these places where people feel connected, because I do think there’s a little bit of this loneliness, and smarter people than me have documented the loneliness epidemic, but I think it’s real. And when we convert these stores into true coffee houses and cafes, you see it. When somebody is sitting there, even with their headphones on and on their laptop, they’re choosing to be in a place where there are other people. And I think it just matters.

Penny Pritzker:
So talk about speed. When you come into a situation like this, what do you have to decide quickly, and how do you get people motivated around that energy that you want to see and that change?

Brian Niccol:
Yeah. Look, I think decision making early on is really important to demonstrate that you’re willing to make the decision. And I think a lot of people get stuck because they just aren’t willing to say yes or no. And I literally shared this with our team. I’m like, look, the faster we can get to a yes and the faster we can get to a no, we’re going to be so much more effective in getting this business turned around. Because now we’re finally either closing doors or opening doors. And I also wanted to demonstrate to this organization, speed matters. That’s still one of the things we’re working on is the speed at which we get decisions made and then implemented, we still have an opportunity to be a lot better.
And that’s partly fixing organizational design. It’s also getting people comfortable with being accountable. And I think when you as the leader are willing to demonstrate you’re going to be accountable, you’re comfortable making the decision. And oh, by the way, even if it’s not 100% the right decision, that’s okay. As long as you’re willing to recognize it, learn from it, and obviously don’t repeat it. And this is what I mean by you got to be a learning organization, you got to be a curious organization. The only way you can do that is if you’re willing to make quick decisions.

Andrew Edgecliffe-Johnson:
So on that learning process, you talked about pilots. You’ve not tried to roll everything out instantaneously across every Starbucks store. You’ve taken some test markets. Can you talk us through that kind of process of how you think about testing, piloting, scaling up, what you watch for when you know it’s time to [inaudible 00:25:51]?

Brian Niccol:
Look, I think this is just kind of balancing risk. There are some things where you’re like, well, that’s no risk. Putting the coffee condiment bar back in, that’s no risk because, by the way, every coffee shop does that. So we should be able to do it. And by the way, we were doing it. Turning the outlets on. What’s the risk in that? People stay? Great. Easy. Staffing the store with the right number of people on the roster. Now you’re getting into the decision of who you hire, how many people you hire, how you will deploy those people. Those are decisions that you got to walk your way into. Can do it quickly, but you got to be smart and be informed so that what you’re doing is not just a hunch, but it’s informed a little bit. And look, instinctually, I was like, I think we need more people in the store in order to execute the customer service experience I believe we should be. But it was centered on this simple idea of like, we’re going to be a coffee house.

Penny Pritzker:
So let me ask you a question. Was it data that drives here’s how I’m going to change things in the store? In the sense of, okay, I’m getting enough volume in that store, therefore I can afford to have more people, and I’m doing both at counter and drive through, and I need to handle these variety plus mobile all happening at once. Or is geography matter? In other words, is it different in California than in New York, different in China than in other parts of the world?

Brian Niccol:
You know what’s interesting is people are actually quite similar when it comes to their willingness to stand in line, their willingness to wait for their drink, their willingness to have a great seat. And so there was data that showed me we had plenty of demand. We weren’t servicing the demand effectively. So people were getting out of the drive-through line, people were getting out of the line when they walked into the cafe. I saw people were abandoning mobile order because times were getting past 12, 15 minutes. So I was like, okay, there’s demand. If I can figure out how I can unlock the bottleneck, free up more throughput, I think the investment will pay out. When I realized it was going to be 5, $600 million type investment, I was like, okay, I got to do a pilot to make sure the data that I’m seeing is actually what I can see in execution. And that’s basically what we saw.

Andrew Edgecliffe-Johnson:
Just you’ve articulated a fairly ambitious growth plan to roll out more stores in the US and beyond. You’re not alone in seeing that opportunity. There’s a lot of competition now from some new places, including China. Where do you think you are going to end up in terms of market share as other people try to crowd into exactly the same place?

Brian Niccol:
Yeah. Look, I think to me, the good news is there’s so much growth to be had in the category that we’re competing in. And that’s part of the reason why you see these other players entering, whether it’s in China or in the United States, it’s just a sign that more and more people are interested in coffee/drink experiences. So the good news is when a category’s growing and you’re the market leader, you stand to benefit the most. Now, with the caveat, you have to be staying in front of where the trends are, where culture’s moving. If all we sold was hot coffee, we’d be a much smaller business today. So you have to hold onto the things that are the constants or the core, but you have to do it in a way where you’re staying relevant in culture.
And I say this to our team all the time, I’m like, I love competing. I love the fact that I see more people entering this category and coming up with new ideas that, frankly, sometimes we have that idea and other times we don’t have that idea. But I’ve got a huge scale advantage that when I see a great idea and I put it across that scale, and I learned this probably at Procter & Gamble because I had the opportunity to work on brands that had massive market share, and the one thing I learned there was market share matters.
And we’re going to continue to be the market leader. And then where we see opportunities, we’re going to step into it, but we got to do it in the Starbucks way. Where you get in trouble is if you try to be somebody else’s business, that’s where you get in trouble. And I think that was one of the things that kind of got us off our game a little bit. We’re like, maybe we can be a drive-through only business or maybe we can be a digital-only business, or maybe the cafe doesn’t matter anymore. And I’m like, no, no, no. The cafe defines us. We can do these other access points. We can do a drive-through. We can do mobile order. We can do delivery now. Delivery’s over a billion dollar business. It didn’t exist in Starbucks 18 months ago. So it just demonstrates that we’re in a category that’s got a lot of growth. We’re a market leader and we can’t be complacent.

Penny Pritzker:
You’ve got a narrow margin business, and you’re trying to build community and you’re trying to improve experience. And you’ve got people, baristas, your partners delivering those services. Where’s that constrained? How do you reconcile all that?

Andrew Edgecliffe-Johnson:
Because this required quite a big investment, didn’t it?

Brian Niccol:
Yeah, yeah. Yeah. Look, at the end of the day, you got to grow. You cannot cost cut your way to providing great experiences and building great brands. And so fundamentally, I just believe there was the demand there for this experience that, if we invested in it, we would get the demand. And then if we put on top of it the marketing, menu, digital elements, we can grow. And because if you’re not growing, then you can’t do this, without a doubt.

Penny Pritzker:
And growing is in store as well as outlets.

Brian Niccol:
Correct. Yeah. Yeah. You got to be both. And when you get the great economics going within the four walls, that gives you the freedom to go build more stores. And the good news for us is there’s a lot of opportunity to build more stores. But if you start shrinking within the four walls, your opportunity to build more stores starts to shrink. So it’s so critical. You have to have that growth system in place because otherwise the alternative is you try to cost cut your way. And I think that just ultimately is a death spiral.

Penny Pritzker:
So you talked about scale and you’ve talked about complexity. Tell us about how your leadership has changed. What have you had to give up doing? How have you changed the way you approach getting it done?

Brian Niccol:
Yeah. I love being a part of doing the work. And sometimes you got to recognize, I got to give the space to this person to have the steering wheel on this one. And I think just over time you get more comfortable with it because you know you’ve got the right person, you trust them. And what I’ve realized is you can’t do these things on your own. That’s probably the biggest thing. As you kind of grow through your career, you just realize if you think you can do this on your own, you won’t be successful. You got to be able to lead through other people. And then you got to be willing to sometimes just be a cheerleader, and also be a person that’s going to be the one that holds them accountable when it’s not going well. Because people love feedback when it’s coming from a place of we want to be better collectively. Collectively. And I think that’s kind of what I’ve learned over time.

Penny Pritzker:
How do you protect your time, what are the things that you need to protect your time so that you’re able to bring your best self as a leader of Starbucks?

Brian Niccol:
Yeah, that’s hard. It’s something I think every day I’m working on. I have a tendency to say more yes to things than I probably should. But look, some of the things where I’ve carved out for myself is I try to protect a workout in the morning. So if I’m working out from 6:00 to 7:00, don’t schedule anything. And it really means probably not till 7:30. I made the mistake where it was like 7:00, and it’s like, it just doesn’t work. Either you have to cut your workout short or you end up late for the 7:00 AM commitment.
So this is the thing you just grow over time. It’s like, if I want to make it to my daughter’s tennis tournament, when I tell her I’m going to be there, then I got to protect it and show up on time. And the one thing I have found over time is, it kind of goes back to what I said earlier, it’s really powerful when you say yes or no. Because when you say yes, then you got to show up. And if you say no, people understand it and they’ll actually respect it because they know when you say yes, you mean it. And you’re going to be there and you’re going to show up and be in person.
But for me, I get a lot of energy from family dinners on Sunday. And I try not to travel Sunday night. I really do protect that. It’s like I want to make sure we can have our family dinner. So I’d rather leave at 4:00 AM Monday morning, 3:00 AM Monday morning, midnight, but I want to protect that Sunday family dinner. And so you just find a handful of things where you’re like I’m protecting those. And I’ve gotten better at it over time. But if my wife were sitting here, she’d say I still have opportunities, I’m sure.

Andrew Edgecliffe-Johnson:
We’ve talked a lot about people. Technology is obviously vital to this business as well. How does AI change both the operations of Starbucks and the outlook for the people in Starbucks? Is this an industry where the baristas should be feeling nervous, or they’re the people who are going to be least disrupted by AI?

Brian Niccol:
Yeah. Look, I think the one thing we can all agree on is I don’t know where this AI thing ultimately goes. What’s definitely true is it’s a pretty powerful tool. And the way we’re using it is I do believe that barista to customer experience is critical, and I don’t see AI replacing the humanity of that experience.
And I’ll give you an example. So our drive-through, and this was actually one where I learned something kind of interesting, which just speaks to the ritualistic aspect of our business, which is when a person shows up at the drive-through at 5:30 in the morning, they usually get the same barista on the other side of that speaker. And they also get usually the same barista at the drive-through window that’s handing them their coffee.
But what we can do is use AI to input the order. So while the barista is getting the order and talking to you, Penny, like, “Oh, what are you having? How’s your day?” While you’re saying what your order is, AI can actually input the order into the POS system. Gives our person the ability to be more focused on connection, and also the ability to create the craft of the drink. So I think that’s where a great example of how it can work in harmony. The voice technology in these things, they keep getting better and better, but I have yet to see it replace just the humanity of people talking to people. And that’s a big piece of our brand. So I don’t see that ever totally replacing.
But then there are other places where when you look at our processes where you’re like, geez, this process seems to take us a month to get done. I think you’re going to find with AI, that group of people now can get that process done in a week. And so all of a sudden the output we’re going to be able to get from the number of employees working on these various processes, I think it’s going to go up. So I don’t know if that results in people losing jobs, but it probably doesn’t mean we need to be hiring as aggressively as we have been in the past. So we’ll see how it plays out. I really don’t know. There’s a lot of interesting things that come with the technology that I think can make the experience better for both employees and customers and ultimately the experience.

Penny Pritzker:
I love how you’re leaning into the human connection. I think it’s being lost. Does that feel like a contrarian bet in today’s day and age?

Brian Niccol:
It does. A little bit. Yeah, a little bit. But I don’t want to have it interpreted as we’re not experimenting with technology. I just think it can’t be at the expense of the humanity. And again, I think that’s a constant at Starbucks, and so we got to hold onto it. So if we can figure out how you can use AI to enhance the time for people to connect, I’m all in. But if it starts replacing that element of humanity, I think we might be missing the mark, at least when it relates to Starbucks.

Andrew Edgecliffe-Johnson:
So part of the bringing back humanity to Starbucks strategy was giving your baristas Sharpies again to write our names on our cups. What’s happened to your Sharpie budget?

Brian Niccol:
Well, we probably should ask Sharpie. But look, it’s great. That’s a simple cost that goes a long way. And I just had experience the other day, a gentleman got a cup, and it was written on his cup best day ever, and he recognized me and he was like, “Hey.” And he holds the cup up, he’s like, “Best day ever.” And I’m like, I think those little moments matter. And I hope our baristas enjoy doing it. I know sometimes it gets busy and it feels like it’s a task, but I hope they realize it makes a big difference, and hopefully it gives them a little joy. It definitely gives your customer a lot of joy.

Penny Pritzker:
So when you think about Starbucks a year from now, where do you want to be? What do you hope is different?

Brian Niccol:
Well, look, I definitely think we will have reclaimed the third place. There’ll be no debate on whether or not Starbucks is a coffee house with a great third place. And I think that is really, really important. I think the other thing you’re going to see is us leading again on innovation when it comes to beverages, food, and just being in culture, like Starbucks always has been.
I really hope people are walking around with the Starbucks cup, and that siren sends a signal of pride, whether you’re one of our partners or whether you’re one of our customers. Because you feel great about the place you just were in or you feel great about the drink that you’re having because you know it came from a place. And so that’s what we’re working towards. We want to be the community coffee house. We want to be the place where Green Apron Service sets the benchmark for what customer service is like. And I hope people are passionate about, this is my Starbucks. This is my community Starbucks. Because to me that means we’re making progress.

Andrew Edgecliffe-Johnson:
So you’ve explained that the CEO’s job is all about what you say yes to and what you say no to. Thanks very much for saying yes to this conversation.

Brian Niccol:
Yeah. Well, thank you for having me. This was a lot of fun.

Penny Pritzker:
Thank you.

Brian Niccol:
It was great being with you guys.

Penny Pritzker:
This was really terrific.

Brian Niccol:
Yeah.

Penny Pritzker:
Thank you.

Andrew Edgecliffe-Johnson:
So Penny, I said at the beginning, what fascinates me about Brian Niccol is he’s running one of the highest profile turnarounds in corporate America. And as a journalist, this is one of those stories that you can’t take your eyes off. Starbucks is so much in the public eye all the time. It’s been an extraordinary story over decades since Howard Schultz turned this kind of Seattle coffee bean retailer into a global brand.
It hit real trouble during the pandemic. There was a sense that it had lost its way, lost its mojo. Howard Schultz talked to me about it losing its soul. And in comes Brian with this really interesting track record of a turnaround, but to a problem on a totally different scale. So he’s just given us the playbook. What did you take away? First and foremost, what do you think was the core key starting element to that playbook?

Penny Pritzker:
I think the core message that he shared with us that is really something we should all lean in on and can learn from is about simplicity. Back to basics, back to authenticity. He calls it back to Starbucks. And what I thought was so interesting is he said the baristas got it immediately, the stores got it immediately. It took a while for his executive team to understand what he meant. But a lot of it’s about being back to the coffee house.

Andrew Edgecliffe-Johnson:
Yeah. And I thought, he’s a marketer at heart, he’s grown up in some of these great marketing organizations like Procter & Gamble, Yum Brand. And what I hadn’t realized before this conversation is the extent to which he’s branded the strategy internally. So back to Starbucks, the coffee house walk, the Green Apron Service idea, these are all very, very snappy, efficient ways of getting a big picture strategy to mean something concrete to the people on the ground who are going to have to execute it.

Penny Pritzker:
I think that marketing background is a real benefit for him, but he’s really used it mostly internally. Now they’re going to start to use it more externally. And it’ll be really interesting to see how that’s received. The other thing that I thought was so interesting is he’s talking about team. And his team is a real mashup of people he’s worked with before and people who really know Starbucks. And he’s clearly someone who knows how important it is to get the right people around them and then empower them. And he talks a little bit about how hard it is for him sometimes. He’s a doer. He likes to roll up his shirt sleeves. He has to become more of a cheerleader and a decision maker.

Andrew Edgecliffe-Johnson:
So that was really interesting because he has grown up in these frontline roles. And as CEO, you’ve got to be the kind of orchestra conductor, haven’t you? And the thing that stuck with me is that very simple description he has of the CEO’s role is you’ve got to say yes to things or you’ve got to say no to things. You can’t sit on the fence. And what’s critical there is acting with speed yourself and telling your team that they are empowered to act with speed too. And if they say yes to something and it doesn’t work out, then you reconsider. Unless it’s a terrible mistake, you’re going to go back to the drawing board, you’ve done a pilot, you correct that pilot, you adjust, and then you scale it. So putting all this together, how-

Penny Pritzker:
It’s a great episode.

Andrew Edgecliffe-Johnson:
… would you describe the playbook?

Penny Pritzker:
I think it’s a great episode because he talks about simplicity, talks about communications, he talks about team, he talks about speed and decision making. So much for all of us to learn.

Andrew Edgecliffe-Johnson:
Absolutely. That’s it for this episode of The CEO Signal from Semafor. I’m Andrew Edgecliffe-Johnson.

Penny Pritzker:
And I’m Penny Pritzker. Thanks for listening, and please like and follow the show. Also, please make sure to join us for the next of these conversations.

Andrew Edgecliffe-Johnson:
The CEO signals produced by Joanna Harrison, Semafor’s editor-in-chief is Ben Smith. Special thanks to Jim Hawk, Mackenzie Kurth, Daniel Marlborough, Francesca Robinson, and Rita Okun from PSP. And from Semaphore, Anna Pizzino, Claire Einstein, Tori Kuhr, Daniel Hoeft, Josh Billinson, Joey Pfeifer, Katherine Bilgore, Rachel Keidan, and Zan Ed. Video editing is by Kurt Goldberg and Pear Boys & Miller, graphics by Noetic and Daniel Romero, and the music was composed by Steve Moon.