Introduction to Starbucks’ Turnaround Strategy

Customers order at a Starbucks in Manhattan Beach, California, on July 19, 2024. As Starbucks aims to bring back customers and assuage investors with its turnaround strategy, it is also winning over its store managers with promises to add more seating inside cafes and promote internally.

The "Back to Starbucks" Strategy

Since CEO Brian Niccol’s first week at the company, he’s been pledging to bring the company "back to Starbucks" to lift sluggish sales. That goal was in full view at the company’s Leadership Experience, a three-day event in Las Vegas for more than 14,000 store leaders this week. Starbucks unveiled a new coffee called the 1971 Roast, a callback to the year that its first location opened at Pike Place in Seattle. The finalists at Starbucks’ first-ever Global Barista Championships referred to "back to Starbucks" as they prepared drinks for judges. Even the wifi password was "backtostarbucks!".

Winning Back Customers and Investors

To investors, Niccol has already presented a multi-part strategy that involves retooling the company’s marketing strategy, improving staffing in cafes, fixing the chain’s mobile app issues and making its locations cozier. The company also laid off roughly 1,100 corporate workers earlier this year, saying it aimed to operate more efficiently and reduce redundancies. Starbucks shares have climbed nearly 20% since April, and are trading just shy of where they were after a nearly 25% spike the day Niccol was announced as CEO.

Regaining Faith Among Employees

While Starbucks has taken major steps to win back customers and Wall Street, it’s also trying to regain faith among its employees. Staffers have had concerns about hours and workloads for years, sparking a broad union push across the U.S. To excite the chain’s store managers, Starbucks executives’ pitch this week focused on giving them more control. Before launching new drinks, like a protein-packed cold foam, the company is first testing them in five stores to gain feedback from baristas.

A Culture Shift

New Initiatives

When the chain increases its staffing this summer, managers will have more input on how many baristas they need. And next year, most North American stores will add an assistant manager to their rosters. "You are the leaders of Starbucks. Your focus on the customer is critical. Your leadership is critical. And as you return to your coffeehouses, please remember: coffee, community, opportunity, all the good that follows," Niccol said on Tuesday.

Returning to Starbucks’ Roots

Niccol’s "back to Starbucks" strategy centers on the idea that the company’s culture has faltered. Its Leadership Experience, typically held every couple of years, was the first since 2019 — three CEOs ago. "We are a business of connection and humanity," Niccol said on Tuesday afternoon, addressing a crowd of more than 14,000 managers. "Great people make great things happen." As more customers order their lattes via the company’s app, its cafes have lost their identity as a "third place" for people to hang out and sip their drinks.

Promoting Internally and Adding Seating

To return to Starbucks’ prior culture, the company is unwinding previous decisions – like removing seats from its cafes. In recent years, the chain has removed 30,000 seats from its locations. Those renovations have irritated both customers and employees; the manager of Niccol’s local Starbucks in Newport Beach, California, even asked him to remove her store from its renovation list because she wanted to keep the seating, according to Niccol. "We’re going to put those seats back in," Niccol said, bringing a big wave of applause from the audience.

Staffing and Union Concerns

He earned more applause from the audience when discussing the chain’s plans to promote internally as it eventually adds 10,000 more locations in the U.S. Although historically roughly 60% of Starbucks store managers have been internal promotions, the company wants to raise that to 90% for its retail leadership roles. Thousands of new cafes means 1,000 more district managers, 100 regional directors and 14 regional vice presidents for the company – and more upward career mobility for its store leaders. Staffing more broadly has been a concern for Starbucks and its employees, fueling a wave of union elections across hundreds its stores.

Schultz’s Stamp of Approval

Underscoring the challenges Niccol faces in recapturing the company’s brand, the two speakers who scored the most applause from store managers are no longer actively involved in the company. Former chairwoman Mellody Hobson scored standing ovations during both her entry and exit onto the arena’s stage. Hobson, wiping tears from her eyes, thanked the Starbucks employees whom she said always made her feel welcome in their stores. Former Starbucks CEO Howard Schultz also earned standing ovations from store managers. Schultz, the three-time CEO who grew Starbucks from a small chain into a coffee powerhouse, made a surprise appearance at the Leadership Experience on Wednesday morning.

Conclusion

In conclusion, Starbucks is taking significant steps to regain its footing and win back customers, investors, and employees. The company’s "back to Starbucks" strategy, led by CEO Brian Niccol, aims to recapture the company’s culture and identity as a "third place" for people to connect and enjoy their coffee. With promises to add more seating, promote internally, and improve staffing, Starbucks is working to address concerns and criticisms from all stakeholders.

FAQs

Q: What is Starbucks’ "back to Starbucks" strategy?
A: The "back to Starbucks" strategy is a plan to recapture the company’s culture and identity as a "third place" for people to connect and enjoy their coffee. It involves retooling the company’s marketing strategy, improving staffing, fixing mobile app issues, and making locations cozier.
Q: How is Starbucks planning to promote internally?
A: Starbucks wants to raise the percentage of internal promotions for retail leadership roles to 90%. The company plans to add 10,000 more locations in the U.S., which will create more opportunities for upward career mobility for store leaders.
Q: What is the Green Apron labor model?
A: The Green Apron labor model is a new staffing model that Starbucks is rolling out to improve service times and boost traffic. As part of the model, managers will have more input on how much labor their store needs.
Q: Who is Howard Schultz and what is his role in Starbucks?
A: Howard Schultz is the former CEO of Starbucks who grew the company from a small chain into a coffee powerhouse. He made a surprise appearance at the Leadership Experience and expressed his support for Niccol’s "back to Starbucks" strategy.
Q: What is the significance of the 1971 Roast coffee?
A: The 1971 Roast coffee is a new coffee launched by Starbucks as a callback to the year that its first location opened at Pike Place in Seattle. It is part of the company’s efforts to reconnect with its heritage and culture.

Introduction to the Paris Air Show

The Boeing 787-9 civil jet airplane of Vietnam Airlines performs its flight display at the 51st Paris International Airshow in Le Bourget near Paris, France. Kelly Ortberg’s first Paris Air Show as Boeing CEO was set to be relatively upbeat. Under his leadership that began in August, the company has made strides in ramping up production of its bestselling 737 Max jets, increasing cash-generating deliveries of new planes, and indicating that it’s turning a corner from a series of manufacturing and safety crises and years of lost ground to rival Airbus.

Recent Developments and Challenges

Shares are up more than 13% this year, outpacing the S&P 500. But after an Air India flight crashed on Thursday, marking the first fatal air disaster of a Boeing Dreamliner, Ortberg canceled plans to go to the massive air show that begins on Sunday. The trade event is a big draw for the industry and is held every other year, alternating with the Farnborough Air Show in the U.K. Boeing, Airbus and other aerospace giants host champagne-flowing parties, hold flashy deal-signing ceremonies with executives flanked by model planes, and show off their new aircraft with extreme maneuvers for spectators below.

The Air India Crash and Its Aftermath

All but one of the 242 people aboard Air India Flight 171 were killed when the more than 11-year-old Boeing 787-8 Dreamliner that was headed for London on a sweltering day crashed into a medical student dining hall seconds after takeoff from Ahmedabad in western India. The sole survivor was an India-born British national in seat 11A. The cause of the crash is unknown and will take weeks or months to determine. Questions focus on how the plane so quickly and evenly lost altitude, appearing to glide into a fireball crash. Cockpit voice and data recorders, known as "black boxes," will provide key information.

Geopolitical Tensions and the Air Show

The crash isn’t the only outside factor changing the gathering in Paris. Shortly before the Paris Air Show was set to begin, Israel launched overnight missile strikes on Iran. Hours later, Iran launched drones toward Israeli territory. Airlines canceled flights, with jets in the air diverting or returning to their destinations, while hundreds of others skirted the airspace. The escalating tensions will make military budgets and spending an even bigger focus for the air show, but they also raise concerns about how conflicts and geopolitical tensions could impact demand for commercial air travel.

The Show Goes On

Despite the crash and other external concerns, Boeing, Airbus and Embraer are expected to lock in hundreds of airplane orders. Wait times for popular new aircraft models already stretch into the next decade with demand still strong. Boeing forecast on Saturday that the world will need 43,600 commercial airplanes over the next two decades, with emerging markets driving growth. It expects those markets will account for more than half of the world’s fleet in 2044, up from a 40% share last year.

Orders and Demand

Some of the order signings could come from previously undisclosed customers, though there are many new orders on the line, aviation analysts say. Ongoing issues, such as a lack of trained workers, have delayed deliveries of new planes, while on-again, off-again tariffs have raised concerns about more expensive aircraft and components. Pricing has also firmed up. A new Airbus A321neo was going for $65 million as of the end of April, up from $58 million at the start of 2023, while a new Boeing 737 Max 8 cost about $55.5 million in April, compared with $50.25 million in early 2023.

Return of the Big Jets

Airplane customers are going bigger as international travel continues to bring in money. "It used to be all about single-aisle orders," said Richard Aboulafia, managing director at aerospace consulting firm AeroDynamic Advisory. Now, "everyone is booking these monster twin-aisle orders for international traffic." He said major international airlines like Turkish Airlines, Gulf carriers and others have expanded in recent years, competing for more global travelers, "slicing the pizza into smaller pieces."

Conclusion

The Paris Air Show is a significant event for the aviation industry, with major manufacturers like Boeing, Airbus, and Embraer expected to announce new orders and showcase their latest aircraft. Despite the challenges posed by the Air India crash and geopolitical tensions, the demand for commercial air travel remains strong, driven by emerging markets and the need for more efficient and capable aircraft.

FAQs

Q: What is the Paris Air Show?
A: The Paris Air Show is a major international aviation event held every other year, where aircraft manufacturers, airlines, and other industry players gather to showcase their latest products and announce new orders.
Q: What happened to the Air India flight?
A: An Air India Boeing 787-8 Dreamliner crashed on takeoff from Ahmedabad in western India, killing all but one of the 242 people on board.
Q: How will the crash affect the Paris Air Show?
A: The crash has led to the cancellation of plans by Boeing’s CEO to attend the show, and may impact the tone and focus of the event.
Q: What are the geopolitical tensions affecting the air show?
A: The escalating conflict between Israel and Iran has raised concerns about the impact of geopolitical tensions on demand for commercial air travel.
Q: What is the outlook for the aviation industry?
A: Despite challenges, the demand for commercial air travel remains strong, driven by emerging markets and the need for more efficient and capable aircraft.

Introduction to the WNBA Media Rights Agreement

The WNBA and E.W. Scripps announced a new multiyear media rights agreement to carry Friday night WNBA matchups on Ion. This agreement also includes the "WNBA on Ion" studio show, the first weekly broadcast show dedicated exclusively to WNBA coverage.

Details of the Agreement

The value of the deal was not disclosed, but media reports peg the original deal that expires at the end of the 2025 season at an average of $13 million annually. The WNBA has been airing games on Ion since 2023. This season, the network will broadcast 50 regular season games. Ion is available on pay TV and streaming platforms in more than 128 million homes.

Growth and Popularity of the WNBA

The new agreement comes after Ion has seen huge growth with the WNBA and as the league gains in popularity thanks to stars such as Caitlin Clark and Angel Reese. The network said WNBA Friday Night Spotlight viewership grew 133% year over year and more than 23 million unique viewers tuned into the coverage.

Statements from WNBA and Scripps Executives

"Our robust partnership with the league has flourished, and we are thrilled to solidify ION’s status as the premier Friday night destination for WNBA action for years to come," said Scripps CEO Adam Symson. WNBA Commissioner Cathy Engelbert said the partnership with Scripps has helped the league expand its reach and visibility. "This new multi-year agreement reflects the growing excitement surrounding the league and the rising demand for WNBA games," she said.

Previous Media Rights Deals

The league signed an 11-year media rights deal with Disney, Amazon, and Comcast-owned NBCUniversal last July as part of the NBA’s media rights negotiation. The WNBA’s deal is valued at about $200 million per year.

Conclusion

The new media rights agreement between the WNBA and E.W. Scripps is a significant step forward for the league, providing more exposure and visibility for the players and teams. With the growing popularity of the WNBA, this agreement is expected to bring in more viewers and fans to the league.

FAQs

Q: What is the new media rights agreement between the WNBA and E.W. Scripps?

A: The new agreement is a multiyear deal to carry Friday night WNBA matchups on Ion, including the "WNBA on Ion" studio show.

Q: How many regular season games will Ion broadcast this season?

A: Ion will broadcast 50 regular season games this season.

Q: How many unique viewers tuned into the WNBA Friday Night Spotlight coverage?

A: More than 23 million unique viewers tuned into the coverage.

Q: What is the value of the WNBA’s media rights deal with Disney, Amazon, and Comcast-owned NBCUniversal?

A: The WNBA’s deal is valued at about $200 million per year.

Q: How long is the WNBA’s media rights deal with Disney, Amazon, and Comcast-owned NBCUniversal?

A: The deal is for 11 years.