Starbucks reported early success in its plan to turn around declining sales by bringing back customer perks as free refills, condiment bars and drinks served in ceramic mugs.
Executives for the Seattle-based coffee giant still see the potential to double its number of U.S. stores, which grew by 7% to just over 17,000 locations in the most recent quarter that ended Dec. 29 from the same period a year earlier.
"We're taking a hard look at our store portfolio," CEO Brian Niccol told investors on Tuesday. "In the U.S. alone, we still see potential to double our store count, while improving the health of our portfolio through a renovation program, store builds and closures."
Starbucks reported a 4% decline in comparable-store sales at locations that have been open at least a year, lower than the 5.5% decline expected by a consensus of Wall Street analysts.
The company opened 377 stores in the quarter for a total of 40,576 stores globally. While the pace of new openings was down more than 31% from the 549 stores opened during the same period a year earlier, Starbucks increased its international store count by 7% to 22,039, led by 10% growth in its store footprint in China, its fastest-growing global market.
Niccol's "Back to Starbucks" plan calls for a focus on core coffee products, better pricing and faster service and a return of coffee culture at the chain's cafes.
Some of the steps that have been implemented to upgrade the experience at Starbucks cafes include bringing back ceramic mugs, restoring condiment bars, offering in-store customers free refills of coffee or tea and dropping extra charges for nondairy milk.
The company is also trying to appeal to customers with a new rule that requires people to buy something if they want to hang out or use the restroom at a cafe.
"We'll make sure our stores are warm and welcoming," Niccol, whose turnaround and expansion of Chipotle Mexican Grill was a key factor in Starbucks' decision to hire him last summer, told investors. "The response we've seen since fundamentally shifting our strategy to get 'Back to Starbucks' give us confidence we're on track to turn the business around."
Niccol replaced Laxman Narasimhan, who stepped down as CEO and board director after about 16 months on the job. Starbucks has faced slipping demand in the face of growing competition from smaller, fast-growing independent chains such as Dutch Bros. in recent years.
The CEO change came less than a year after Starbucks rolled out plans to ramp up its global growth by opening 17,000 new stores by 2030, while also cutting $3 billion in costs.