If coffee giant Starbucks (SBUX) were not afraid of unionization efforts before, it may well be after this. Just days ago, Starbucks announced substantial layoffs, and now, CEO Brian Niccol is trying to rally the survivors by insisting that they work harder and do more. This somewhat tone-deaf move cost Starbucks with investors, as shares were down nearly 4.5% in Thursday afternoon’s trading.
Word from the Wall Street Journal noted that Niccol put out a call for greater corporate accountability, calling on workers to return to the office, assuming they were not already fired in the last round of layoffs. Though the “tough love” message seemed more focused on the corporate staff than the front-line workers, it still will likely ring hollow for many.
Niccol admonished surviving staff that they were “…not effective on how things get to the store, and we’re not effective in making decisions and then holding each other accountable to those decisions.” But with same-store sales in open decline over the last four quarters, it is clear something needed to be done to turn Starbucks around. With customers seeking out better alternatives, whether faster or just cheaper, several improvements are slated to hit Starbucks soon. Though whether these are too little too late or not remains to be seen.
Improvements Already Starting
Meanwhile, reports have already emerged that the improvements are under way. Starbucks has reportedly removed 13 drinks from its menus as it is, and is planning to roll out a set of special spring items. While a range of frappucino flavors are gone now, two new cherry drinks are in. The Iced Cherry Chai and cherry cold foam options are stepping in. And, Starbucks will also offer up a new Jalapeno Chicken Pocket, for those who want light and spicy together in the same place.
Starbucks Reserve will also step up its offerings, presenting such tongue-twisting titles as the Iced Ube Coconut Latte and—brace yourself—the Citrus Butterfly Pea Flower Tea Tasting Journey. Just to top it off, Starbucks will also be a riot of color to celebrate spring, with new drinkware and tumblers in a variety of colors.
Is Starbucks Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on SBUX stock based on 16 Buy, six Hold and one Sell recommendations assigned in the past three months, as indicated by the graphic below. After a 20.44% rally in its share price over the past year, the average SBUX price target of $111.19 per share implies 4.27% upside potential.
