- Brian Niccol, the new CEO of Starbucks, has identified mugs as an integral part of his turnaround plan.
As Brian Niccol orchestrates the turnaround of Starbucks, one thing he wants to see is customers enjoying a “mug hug.”
Niccol coined the phrase on the coffee giant’s earnings call this week, where results beat Wall Street expectations, as Starbucks revealed Q1 revenue of $9.4 billion versus the $9.31 billion expected.
The new CEO told analysts on the call Tuesday that he wanted to “elevate the café experience” for customers who wanted to sit in-store—doing so without being bothered by queues of people waiting for their click-and-collect orders.
Mobile and app orders have become something of an Achilles’ heel for Starbucks, with stores simultaneously overwhelmed with orders and customers abandoning purchases before payment because of long queues.
Niccol said he had introduced a pilot program using new algorithms to address these “bottlenecks” of demand, freeing up baristas for “moments of connection” with customers both coming into stores and picking up their to-go drinks.
“I swung by one of our stores with this pilot, and there was no congestion at the counter,” Niccol added. “And what was also really nice is the in-café customer ... We call it a mug hug ... They’re like holding on to that ceramic mug, and they’re enjoying their moment in the café, and there’s not all this congestion surrounding the counter.
“So it’s just a much more pleasant, peaceful coffee experience.”
It seems a significant part of this experience hinges on the mugs themselves—or crockery more widely—with Niccol mentioning ceramics three times on the call.
The man paid a $5 million signing bonus on the four-week anniversary of his appointment doubled down: “We reintroduced ceramic mugs and handwritten notes on cups to better connect with customers and elevate the café experience for those who choose to stay and work.”
Establishing—or according to Niccol, reestablishing—Starbucks as a friendly, relaxed “community coffeehouse” ultimately encourages customers to stay in store longer.
“It’s really amazing to see just how the whole vibe of the coffeehouse just kind of calms down, and you can kind of settle in,” Niccol said. “And ... the ceramic mugs and glasses and plates just add another level of like, ‘Hey, this is a spot where I can slow down, take a minute, whether I’m connecting with others or just taking a minute for myself,’ this is what occurs.”
Revamping the Starbucks vibe
While Niccol reintroducing reusable china may seem like a minor tweak in the context of issues facing Starbucks (global store sales are down 4%, and earnings per share fell 23%), it plays to the wider turnaround of the brand.
In centering Starbucks coffeehouses as a place for community, Niccol has also made tweaks to improve customer experience, such as not charging for nondairy alternatives and reintroducing condiment bars so visitors can customize their own drinks.
In a bid to reduce store congestion, Niccol has also reversed a popular open-door policy in bathrooms.
The decision to ban freeloaders who would pop in to use the facilities without purchasing anything has been controversial—so much so that the coffee giant has had to train staff on how to de-escalate confrontations with irate individuals.
But sweeteners are being introduced—or reintroduced—for customers.
Free refills, for example, are back on the menu, as is the fan favorite of handwritten names and messages on cups.
