Brian Niccol, the new CEO of Starbucks (SBUX), has ended discount pricing at the coffee chain.
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The Wall Street Journal is reporting that one of Niccol’s first moves as CEO has been to cutback on promotions and effectively end discount pricing at the high-end coffee outlets. Prior to Niccol taking the helm on September 9, Starbucks had offered a number of discounts and promotions this year in an effort to boost sales.
Starbucks and other restaurant chains have relied heavily on discounts to win back consumers who have become fatigued by inflation and constantly rising prices. Over the summer, Starbucks ran several 50% off promotions for its specialty coffees and other drinks, as well as $5 specials on coffee and breakfast food combinations.
Starbucks Focuses on Advertising
But now, Niccol is reportedly moving to charge full price for Starbucks’ premium beverages. A pumpkin spice latte, the company’s signature drink of the autumn, costs $6.25 at the company’s U.S. stores but can run as high as $10 when extra syrup and flavors are added.
According to the Journal, Niccol is focused on re-establishing Starbucks’ premium role in the coffee market and charging premium prices for the company’s handcrafted and signature drinks. Heading into year’s end, Starbucks plans to heavily advertise and promote its seasonal drinks to help drive sales.
Niccol takes over as CEO during a rough patch for Starbucks. The company has lowered its sales forecasts twice this year. Since taking control of the company, Niccol has also made several leadership changes at Starbucks. SBUX stock has risen less than 2% this year.
Is SBUX Stock a Buy?
Starbucks stock has a consensus Moderate Buy rating among 24 Wall Street analysts. That rating is based on 15 Buy, seven Hold, and two Sell recommendations assigned in the past three months. The average SBUX price target of $100.75 implies 6.32% upside potential.
