Starbucks' previously popular "Buy One Get One" promotions, once a small perk for office workers, have not boosted company performance, according to U.S. media analysis. New CEO Brian Niccol, who recently took over, is working to reposition the brand by reducing such discount activities and instead focusing on promotions tied to specific holidays, bringing the brand's focus back to coffee.
According to reports from Business Insider and other U.S. outlets, insiders revealed that former CEO Laxman Narasimhan had attempted to attract consumers through discount strategies, but these promotions were ineffective and even caused Starbucks’ market share in the U.S. to decline.
Since Niccol's appointment in September, his priority has been to reduce discounts. Starting that month, Starbucks introduced additional points for members on Tuesdays and special drink discounts on Saturdays, replacing the previous "Buy One Get One" and half-price drink promotions. The aim is to refocus on the essence of the coffee shop and ensure customers keep returning.
Starbucks may raise prices in the future but is not concerned about losing customers, as loyal consumers are willing to pay for the Starbucks experience.
In this high inflation environment, consumers are more conscious of their spending. Customers who previously benefited from discounts may opt for cheaper alternatives if they feel the prices no longer align with the value of the experience. These price-sensitive shoppers might find better deals at other coffee chains or local cafés that continue to offer promotions. Even loyal customers may begin to turn away if the cost of drinks rises too much.
Niccol also plans to restore Starbucks to its former identity as a community café with comfortable seating, delicious coffee, and food offerings, moving away from the recent trend of operating more like McDonald’s drive-thrus.
Analysts at Bank of America noted that Niccol’s experience managing the fast-food Mexican brand Chipotle could help Starbucks better ng budget which I don't agree.
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