, and the elimination of surcharges for non-dairy milk alternatives. Its net income fell nearly 23 per cent to $780 million from $1 billion a year earlier. The coffee chain’s North American sales, including the US, declined 4 per cent, with an 8 per cent decrease in transactions partially offset by a 4 per cent increase in average ticket size. International sales also fell 4 per cent, with China experiencing a 6 per cent decline. Despite the results, which chairman and CEO Brian Niccol described as “less than ideal”, he expressed confidence in the company’s Back to Starbucks strategy to improve profitability. “While we’re only one quarter into our turnaround, we’re moving quickly to act on the ‘Back to Starbucks’ efforts and we’ve seen a positive response,” Niccol said. “We believe this is the fundamental change in strategy needed to solve our underlying issues, restore confidence in our brand and return the business to sustainable, long-term growth,” Despite softer sales, Starbucks continued to expand, opening 377 net new stores and bringing its global network to 40,576 locations, with the US and China representing 61 per cent of the total. “We are in the beginning chapter and have much more work ahead,” added Rachel Ruggeri, CFO at Starbucks. “We will continue to prioritise shareholder value through dividends while we turn around our business,” she said. ‘Back to Starbucks’ The quarter marked the first financial results under the leadership of Niccol, who joined Starbucks last September following a six-year tenure as Chipotle’s CEO.  The company plans to simplify its menu by reducing 30 per cent of offerings by late this year and deploy digital menu boards across all the US company-owned stores over the next 18 months.  According to the CEO, Starbucks started by reducing the frequency of discount-driven offers, resulting in 40 per cent fewer discounted transactions year-over-year. The company also removed the extra charge for non-dairy milk customisations and identified several other steps to make its pricing architecture more transparent for customers.  “The path Starbucks is taking is both commendable and courageous, as it requires deep introspection and a renewed focus on customer empathy,” Catherine Bautista, partner at Flying Fish Lab, told Inside Retail. “In any transformation, improving productivity is essential. While this often gets a bad rap – being associated with cost-cutting and downsizing – it doesn’t have to be negative,” Bautista said.  Starbucks has been testing ways to achieve its four-minute service goal while maintaining personal connections with customers. However, this target would seem to conflict with the CEO’s initiative to humanise the brand by having employees write personalised messages on cups. In CNN interviews, baristas reported that writing messages on every cup not only slows down service but feels forced and inauthentic. Some customers have even misinterpreted these messages as flirting. These complications underscore the challenges Starbucks faces in executing its revival strategy. As the company drifted away from its core brand values, it ended up investing in areas that, looking back, didn’t truly resonate with customers, Bautista said.  “By refocusing on what makes Starbucks special – staying true to its brand and delivering value that matters to its customers – this shift toward simplification can actually strengthen the business,” she said. “When done right, streamlining operations isn’t about cutting corners; it’s about doubling down on what truly drives customer loyalty and long-term success.” While the “Back to Starbucks” plan emphasises a return to core values, it doesn’t mean putting innovation on the back burner.  “Starbucks can still roll out new products, services, technologies, and store formats as long as these changes align with its brand identity. Customers expect Starbucks to evolve, but they also want the brand to stay true to what makes it special,” she said.  “Take the Pumpkin Spice Latte, for example: its success proves that innovation thrives when it feels authentic to the brand. This is where ‘controlled disruption’ comes in – it’s about exploring new possibilities and making strategic shifts that strengthen your competitive edge while staying rooted in what makes your brand distinctive.” Further reading: Can the ‘Back to Starbucks’ strategy reverse the company’s fortunes?