[0:00]All right, welcome to a new episode of the Opening Bid Unfiltered Podcast. I'm Yahoo Finance Executive Editor Brian Sozzi. And like I always say, this podcast will make you a smarter investor period. And, uh, really cool episode on tap here, uh Dreamforce in San Francisco, of course, that is Salesforce's big annual tech gathering where they talk about AI, the future of technology. And, uh, you never know who you're going to find here at Dreamforce, and I didn't think I was going to find this guy here, but he is here. It is Starbucks CEO Brian Nickol. Brian, good to see you in person. I've been seeing you in, I don't know, remote digital boxes for six or seven years. It's good to actually physically see you. It's great to be here, Brian. Um, what brings you to Dreamforce? You know, uh, well, obviously, like any other business right now, we're all, uh, trying to learn our way through how AI impacts the business. And, uh, you know, I've constantly say to our organization, we need to be a learning organization, we need to be an experimenting organization, and this is an opportunity for me to learn more about what's going on in this space. And understand from others how potentially they're using it in their business and then maybe what the application would be for Starbucks. How are you using AI in Starbucks? So right now, probably the biggest thing we've done is this, uh, kind of barista assistant, it's called the Green Dot, you might have heard us talk about it. And it really helps our store leaders navigate how to run the Starbucks. So, you know, if you run into an issue with a piece of equipment, or, uh, how to build a certain drink, it's a really fast way for us to then give them support with AI to get them to the right answer faster, or to the right solution faster. Uh, but we're also experimenting with it in other places from voice to, uh, um, you know, also across the business as it relates to, you know, inventory, supply chain. Uh, so there's a lot of neat things that we're experimenting with, obviously forecasting, scheduling, um, but none of those things yet are at scale. How I was thinking dark down there, there's a figure robot. Like are we nearing where there's robots in the coffee store? Like, is that going to happen? Uh, we're not, we're not near that right now. Uh, we just put more partners back into our stores to give people a great experience. We're not robotic, right? Not robotic. But not robotic. These are these are real people that are here to give you a real experience with, you know, real craft. Is AI unleashing more productivity in your business because that's the undercurrent here. Like, all this stuff is great. A lot of companies, I mean, Walmart, you're on the board, they just announced a big deal with what, Chat GPT, like these things sound great in press releases, but like, like, are they actually working and doing stuff? So we're, we're still in the early days of this. Um, but I, I believe there is definitely opportunity here to help us get things done faster, more efficiently. Uh, to what scale that is to be determined. Uh, and this is what I mean by experimentation and learning. Uh, you know, but we're definitely already seeing a big impact in our technology area. You know, the ability to get code done so much faster is real. Uh, how we do that, we still need to figure that out. Um, because, you know, we're still working from some legacy systems that we need to figure out how you layer these things in or work in partner with it. You know what's amazing to me. I, I originally met you, I think, um, when you were at Yum Brands at a New York City investor day 2016 or 2017. I was still going on my career. I think we just talked about menus. Now we're now we're sitting here talking about like AI and how we're probably talking about using social media just at the start of that, right? So, it's just absolutely mind blowing. Exponentially faster.
[3:16]It's true. Um, so you are over a year into the role of CEO of Starbucks. Finish this sentence for me. The Starbucks of today is You know, I think the Starbucks of today is getting back to being a great experience for customers. You know, we've switched away from, I think being focused on efficiency and tasks and reoriented the business to being a great customer service company again. And that means personalization for, you know, what's your drink, Brian? It is now the protein ice coffee. I mean, I go right out of my High Rocks training class and now I'm having this protein drink. That's a little expensive, I will take that in a little bit later, but still, it tastes good. Well, you know, look, I started my day with a protein latte, vanilla latte. Uh, so obviously there's going to be more innovation coming that I think is very much on trend. But I think what you'll also find is our baristas are better set up to give you that great experience for that personalized drink that you want to have. And I think that's where Starbucks is today, versus a year ago when I talked to our partners, they didn't feel like they were set up for success to give people the experience that they actually expected from Starbucks. I, I've joked to you in the past, like, I followed how you rolled out items at Chipotle, and they were called a stage gate process. I would hear about this a lot. How have you changed the innovative process at Starbucks because before you, they would try this energy drink, and I would order this pink and blue drink and it tasted like nothing, it was not as advertised. Like, what are you doing different? Yeah, look, we are using a stage gate process. Uh, you know, it, it's one of those things that I think when you put some discipline in place around innovation, you end up with bigger innovation that can be executed correctly. And, uh, protein's a great example. Uh, you know, that really went through our process. That's really the first item, uh, that we had the ability to say, let's take this from idea all the way to scale. And on our way, we started it in five stores. Uh, we got a lot of feedback from those baristas on how to make it better. When we got that feedback, we then put it into, I think it was around 100 stores. And then we better understood, what's the supply chain necessary? What is the right way to build this? And what is the way that customers want to order it? And so you, you've seen us make some changes in the app. You've seen us make, I think, some smart decisions in how it's merchandised in the store. And then most importantly, our baristas are set up to execute with excellence every single time. What's next? Uh, not necessarily just on the coffee front. How are you reinventing that, that bakery case when I walk in? Yeah, well, look, I, I think you might have heard me talk about this from the beginning, I said, look, we got to get back to winning the morning. And I think we've done a nice job of setting ourselves up to win the morning. First from an experience standpoint around coffee and beverages. Now we're going to turn our eyes to, how do we make the bakery case relevant and more relevant for that morning experience? And so we've got a new, uh, bakery case that will be coming out with, I think more artisanal pastries. You're not, are you doing away with my egg bites? They are off the menu. No, no, no, that's a staple. Uh, you know, so this is more focused on how do we get the pastries right? Uh, we've already got some great innovation coming on what I would call like the protein forward breakfast items. The egg bites platform is a home run. Uh, we need to figure out we can continue to leverage that going forward. What else, what else protein can you sell like foods? Well, you know, look, this is where I think we now have to focus on how do we build an afternoon day part. And so it's like, win the morning. Let's start building the afternoon. And in the afternoon, I think we have opportunities on food, um, to get the right selection of food. And then I also think we have opportunities on drinks to figure out how we can bring the right craft with the right flavors, uh, customized energy as a matter of fact, even with those drinks and flavors. So, you know, I'm optimistic about what we can do on the afternoon day part while we continue to make great progress in the morning day part. There was a Starbucks and I think it's still by me in the city, at one point, they were serving alcohol. You're a big believer Starbucks should be serving some form of drinks with alcohol in it? You know, look, I I think that's a great example of experimentation that's happening in our roasteries and reserves. We have some fun ideas. Uh, you know, I've heard about the Macho Margarita. Espresso Martini. The espresso Martini is a a crowd pleaser, but there's some fun things we can do, right? Macho Margaritas, you know, the pink drink Cosmo. So, I think there's some fun things we can experiment with alcohol on. You know, it's still at a very small, small, small level, but, you know, when we strike the right chord, if we have the ability to scale that, we will scale it. Now you're also remodeling a lot of restaurants. Um, you know, how many are you going to remodel? And what is your hope for these remodels? Yeah, look, uh, you know, we've done about a hundred so far. Our plan is for this fiscal year to do well over a thousand. And, you know, these uplifts is what we're calling them because it's really focused on the front of house experience, meaning the seat you would have. Plants. Uh, yeah, there'll be rugs, there'll be drapes, there might be some plants. Like, the the purpose is to get back to having that great third place. You know, uh, Howard and frankly, Starbucks in the beginning of this concept, recognized people wanted to spend time in a third place between home and work. And we got to get back to giving people that environment. And I think it's important that you walk through that environment, even if you're going to grab and go. Or if you're pulling up to the drive-through, what do you see through the drive-through, the coffee house over there, where maybe next time we'd like on the plane. Well, maybe next time you might want to get in there, right? And grab a seat. So, uh, I love what's happening. Uh, I always say to people, every coffee house needs to have a couple seats where everybody walks in and says, that's my seat. Like, when that person moves or if it's available, like, that's my seat. Have have the times changed on, let me just push back a little on this. Um, I see the next generation, let's say, under 20, they're glued to their phones, and they're just in a rush. Do they really want that, what was it, the third place? Like, is there, what is it? Look, I think so. I mean, if you look in our cafes and especially like after school, call it the 14 to 18-year-old crowd, they need a third place to hang out with their friends. And they want to, they want our drinks. So, um, absolutely. You know, and I think actually, if we have more of these third places, you know, maybe I'm being a naive parent here a little bit, but I hope they would put their phone down and connect with each other. Yeah. And we're going to provide him that space where they can do it. You're already seeing schools adopt this where, you know, less and less kids have their cell phones in the school because they want the kids to connect not only with their teachers, but with each other. Like, you can see a market difference, if you walk into a school and, you know, cell phones are not part of their day at that lunchroom, because you know what you hear, a lot more conversations. I think they've they've taken them away. I'm in Long Island in New York, so, okay. No more cell phones at all there. So, you know, I know I've seen this in various school districts and I think it's actually, you know, going to be something that the kids are going to find they really enjoy. And then they're going to really enjoy when they have another place to do it outside of school. Do you want us, do you want a Starbucks to go back to what was it, the late '90s, Friends was on and people were just hanging, spending eight hours in a Starbucks, uh, living their life? Is that what you're going for? You know, look, eight hours might be a bit much, but, uh, I think there's nothing wrong with people finding a moment to connect with each other, or, you know, sometimes you just need a moment for yourself. Um, and, you know, do it in a place, and I've seen this actually, Brian. I think it's as much a feeling like you're part of the community where if you sit there and just seeing your community come in and out and you get to say hi to the neighbor or the friend or the family member, maybe you haven't seen all week or the past month, but you see them in passing in a Starbucks. But that's to buy something. And they're not those we're not going back to. Our stores are for customers. All right, you got to make some money. Our stores are for customers and our stores are all about giving a great customer experience. You have, you've re-built the management team. Um, you've changed how even the earnings code, you've made a lot of changes over the past year. Like, what have been some of the underappreciated challenges, you know, for you in that first year? You know, look, it's always not easy to change, uh, I would say culture in the way of working. And the way I find you have to do that, it has to be leader-led. And so it was really important for me to get the right people into the right jobs on my leadership team, so that we could start cascading the way we wanted to work going forward. And I think we now have a great team in place. We still have, you know, uh, an area where we're looking, we had our head of technology, uh, just retire, uh, so we'll replace that role. But once we get that role replaced, you know, and we're get, we've got our team in place and now it's about driving culture. It's about executing against the strategy. And, uh, you know, I'm always focused on making sure I have leaders that in their respective area are world-class. And world-class both in the work they do and how they do that work. When you were turning around Chipotle, that came after what, it was the E coli scare or incident, whatever it was. Um, it was a smaller chain. Like, is it hard to move a company like the Starbucks as fast as you want? It's not just the size of the US business. This is a global brand that has impacted our lives for decades. Yeah, no, no doubt. This is the Still have all your hair, Brian. I don't know how you're doing this, man. It's pretty crazy. Well, look, you know, uh, here's what I'll tell you. It is clearly one of the great global iconic American brands. Uh, you know, with 40,000 stores around the world. Um, but that's why the strategy of Back to Starbucks is so important. It's very simple. I think it's very clear, so that everybody in every store, no matter where you are in the world, when I say back to Starbucks, they know what I'm talking about. And, you know, they can rattle off the four key things that are happening, right? We're, we're going to set our partners up for success. We're going to return to a great coffee house. We're going to have great craft innovation, right? So, as soon as people understand what are we after, there's a lot of energy around it. And, you know, to me, that's what's most important. If I can get every single one of our coffee houses to be energized about the path we're on, to becoming the world's greatest customer service company again. Rooted in coffee, rooted in beverage, and rooted in this third place. I, you know, I'm really optimistic about where we can get to. Brian, hang with us, Brian, we're going to go off for a very short break. We'll be right back.
[13:17]All right, welcome back to Opening Bid Unfiltered here at Dreamforce in San Francisco. Talking to some, uh, AI, a little coffee, a little protein menu with Starbucks CEO, Brian Nickel. Um, so Brian, I went into, to fly here, I took JFK out of New York. I went into the, uh, what looked to be a newly remodeled location of my coffee. They had a a digital screen, like a touch screen on the wall, like sequencing the orders. Yeah. I'm like, that makes a lot of sense. Like, what is the future of mobile order and technology? Yeah, look, I'm glad you're bringing this up. So you might have heard me talk about this. It's a behind the scenes technology that's happening. We call it Smart Queue. And really what this does is it, you know, remember, so in the airport, you don't have all of our access modes, but you do have the counter access mode and the mobile order pickup access mode. But in a lot of our stores, there's three access modes, right? Or actually four. You got drive-through, you got delivery, you got mobile order pickup, and then obviously you have the counter. And unfortunately, there was no, uh, order to that ordering system. They all it was chaos. But this is pre years. Yeah, yeah. It was all first in, first out. It created a lot of bottlenecks. So, the technology behind the scenes is to smooth out the bottlenecks, prioritize the right order at the right time, so that we get the customer their drink. Under four minutes if you're in cafe, if you're in the drive-through, and then obviously, we want to be on time and accurate when you order on mobile order. And so, what you saw there was our basically our order board, which then shows we've received the order, it's in progress, and it's ready, which also is just another way for people to understand where their drink is in the system. So that when you walk in, you know whether or not your drink's actually on the counter. We also, with our new, uh, staffing model, we should have people at the counter that are able to sequence the orders for you. So they should be able to say, Brian, your drink is ready. And we should have timed it such that you're at the store when you, that's great. Oh, that's great to hear. No, no joke. It was really beautiful. Because airports, look, airports are still a real opportunity. And no time. Like, people are time constrained. They want their coffee when they want their coffee. Um, so, you know, we got to solve the problem, so the people can get the Starbucks experience that they want. How might AI change how we interact with the Starbucks app? I'm sure you obviously working on AI behind the scenes, but like, what's the next iteration of this app? Look, I think there's a real opportunity in the app for voice ordering. I also think there's a real opportunity to be more, uh, almost like anticipating what we know you're going to order, right? There's a great feature in the app right now where it just basically, you can select on your most recent order. It's really seamless. It's a great experience. But I think we're going to find ways to iterate on this so that it becomes even faster, even more seamless. Uh, and who knows, you may not even have to open the app, right? Starbucks is just going to know what I want protein. Well, you know, you're, you're, obviously you have these phones and you can just literally talk into your phone, like, hey, I need my Starbucks order. I'll be there in 10 minutes, and everything's just seamlessly goes through the app, and the next thing you know, you show up at Starbucks and your drink is ready. So, the more we can remove friction is what we're going to go after. Uh, and I believe AI is going to help us do that. This comes, of course, a lot of the re-invention work you're doing, and is a challenged consumer backdrop out there. Um, you know, what are you seeing with the consumer at this point? You know, look, I I think we're seeing consumers be much more choiceful in where they want to spend their dollar. Uh, and I think that's why it's so important for us to make sure that the experience you walk away saying, that was worth it. And what I'm, what I'm happy to say is our value scores and the comments of people saying Starbucks is worth it, are finally getting back to where they should be. Uh, they definitely took a dip in the past, but I think the work that we've done over the last year has put us back in a position where people are saying, I'm getting the service experience. I'm getting the drink experience that would say, this is worth it. And, you know what, we have premium coffee, and I think we have a premium experience, and, yeah, our coffee's going to be priced a little bit more premium. So for that drink at, at JFK that I purchased, I got purchased the protein, I got it right off the menu. It was 9.95. What size did you get? Uh, the larger one. I think it was two options. Venti or. Uh, uh, the, Venti, yes. Is the reality that, you know what, if I want that experience, I'm just gonna have to pay 9.95? Well, I mean, in the airport, in that execution, you know, I, I think so. And I think relative to your alternatives there, I think you would, people would say, that's still a pretty good value. Uh, and that's what we have to make sure is, where our business is, are we providing a value where people say, you know what, that was worth it. Uh, so, you know, obviously the context matters a lot where it's happening. Um, and we got to make sure we give the experience that justifies the, uh, the price that we're asking people to pay. Would you dip back into your young brands marketing days and get more promotional to meet consumers where they are? No. No. You know, you know, that's not who we are. We are, what our business is is craft, quality, experience. And, you know, we should give you a setting where you feel like it's elevated. And, uh, you know, I, I love the line, affordable luxury or accessible luxury. You know, everybody deserves a moment like that, and we're going to be the brand that provides that experience in that moment. What will define success for Starbucks over the next year? Look, I, I think for me, what I'd love to hear from our customers and from our partners is saying, we are back to being a great coffee experience. You know, there is no better customer service experience than a Starbucks experience. I think we do that. You know, everything else will take care of itself. Um, so, you know, that, that's where I hope we continue to move towards. Um, and, you know, look, I think it's actually a void out there. You know, if I were to ask you, who's a great customer service company right now, no comment. Yeah, yeah. You know who's a great customer service, Yahoo Finance. Oh, we offer like great investing knowledge, all right? There you go. So Yahoo Finance and Starbucks. Okay, that's fine.
[18:57]That is correct. Um, so a lot of my friends knew that you were coming and they had a lot of fun questions for you. I think they're fun. Uh, first up, why can't the PSL stay on the menu longer before the holiday menu sets? That's that's a great question. Well, so the whole idea of the Pumpkin Spice Latte is like, it's your first sip of fall, right? And it brings you into the fall season. Um, and then the good news is, we've got great holiday sips coming, right? You're going to have the Eggnog coming back, the Chestnut Praline coming back, Peppermint. Um, so it's right for fall. Look, I love it. It's a great product and I actually love all the baked goods that come with it, the pumpkin muffin. Um, you know, it's, I'm kind of a pumpkin fan. Really?
[19:42]Uh, yeah. And, you know, but the reality is, these seasons are important. And, you know, we want to keep that special to fall. And, uh, I love this idea of, hopefully we can have the first sip of summer. I think we do a nice job of having the first sip of holiday. Um, so more to come, but I can understand why they'd love to have it year-round. Fair enough. Okay, answered question. Uh, holiday cups, what will they look like? They're going to look beautiful. Okay. Red, just red cups, Starbucks, what else? They're going to go beyond just red. Uh, but I think they're going to give people that holiday vibe that they're after. Okay. And I think it's going to make people feel like, you know, together is the best place to be. Uh, do you get Brian written on your cup? Uh, you know what, I get a lot of different things written on my cup. But on on Sunday, I happen to get, you know, have a great Sunday. Okay. They know that's, they know it's you, right? They know it. Well, not always ahead of time, you know, so if I order in mobile, they may not realize it. Um, but yeah, I might get a little TLC on the cup writing. All right. But you know what? I, I love it. I think it's a nice little touch. It is. Um, and, you know, it's it's just another way to bring that connection to life. All right, let's keep this roll here. We got, uh, what's the one decision this year that kept you up at night? Ooh, that's a great question. I, I would say, you know, uh, the biggest challenge I faced was, how do we get the right amount of partners back into our stores? And I knew it was going to require a big investment, but I knew it was necessary. And, uh, you know, I wanted to make sure we got it right. And so, you know, I wanted our partners to be set up for success because I believe they're the foundational element of this turnaround. And so, that's been the decision that, you know, I think we got it right. Um, and I believe we're getting better every day with the additional, uh, resources that we've put into the store. The, the smartest risk you have taken as a CEO? Smartest risk. You know, look, I always think the best bets you can make are hiring the right people. And, uh, you know, I don't know if they're risks as much as it's never easy to make a change. Uh, so you feel like it's risky in the moment, but whenever I've made a change to bring in what I believe is the right person for the job at hand, it's it's really worked out. Shout out to Yahoo alum, Tressie Lieberman. Tressie, is one of those amazing hires. She is, she is a super talent.
[22:00]We miss her over at Yahoo, Brian. Well, I love having her. All right, fair enough. Um, one metric that you check every morning for Starbucks. You know, every morning I am checking transactions. You know, are we bringing in more customers than last year? And, uh, what is the feedback we're getting from those customers that come in? Do you have a one-word outlook for the US economy for next year? I'm optimistic. How are you using your, how are you using, uh, AI in your CEO life? Well, look, I I've quickly adopted using these platforms like Claude, uh, ChatGPT. You know, there's no better way I think to do quick searches, get background and context on things. Uh, so that's become a much more regular routine. You know, it used to be like, well, let me, you know, use Yahoo or Google. Uh, you know, now I definitely turn more towards these AI tools to just quickly get all the context I want on a topic. Harder job, uh, those early days of being Brian Nickel working on the PNG Scope mouthwash account, or Brian Nickel today at Starbucks? You know what, uh, both had a learning curve. And, uh, you know, I'm very grateful for that first experience on Scope mouthwash. Uh, I learned a lot of things at P&G that I use still use today. Uh, but in every new job, part of the reason why I love taking on these challenges, like a Starbucks or Chipotle, is it's got a wonderful learning curve. I love the challenge. I love being a part of it with people to turn something around. And, you know, I'm optimistic about what we're going to do here. All right, well, Brian, it's good to see you in person, finally. Thanks for making time for always, uh, coming on Yahoo Finance and using Yahoo Finance, I just assume. Uh, appreciate.
