Starbucks CEO says artisanal pastries, protein drinks, and voice app ordering are next on tap

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Starbucks is in full-on retooling mode under CEO Brian Niccol as the calendar nears 2026.

“We need to be a learning organization. We need to be an experimental organization,” Niccol said on Yahoo Finance’s Opening Bid Unfiltered podcast at Dreamforce in San Francisco (listen below, see video above).

That includes keeping up with developments in AI and integrating them into Starbucks’ systems. One use so far is Green Dot Assist, a virtual assistant platform that helps employees solve problems in real time.

“So if you run into an issue with a piece of equipment or 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,” Niccol explained.

The company is also looking for menu innovation and new ways to boost morning traffic, including adding “protein-forward” breakfast items and artisanal pastries. It’s investing in more protein drinks, as well as improving its app.

“I think there’s a real opportunity in the app for voice ordering. I also think there’s a real opportunity to be more, almost like, anticipating what we know you’re going to order,” he said.

In late September, Starbucks disclosed plans to close unprofitable locations and slash corporate jobs in a bid to improve margins and reallocate resources to store worker hours and product innovation.

The company plans to reduce its store count by roughly 1% in Canada and the US this fiscal year. By year-end, the total company-operated and licensed stores across the US and Canada will be nearly 18,300 — down from about 18,842 at the end of the fiscal third quarter.

Starbucks will also eliminate 900 non-retail roles and close open positions. The total restructuring efforts will cost roughly $1 billion.

These efforts sit alongside Niccol bringing back condiment bars, retraining employees, rebuilding menu innovation, recasting the brand on TV, and eyeing a partner for the China business. Starbucks has also committed to remodeling 1,000 stores to bring back seating and even plants, as it bets consumers want a hangout place again.

“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,” Niccol said.

Signs of the Starbucks turnaround have proven elusive thus far as consumers pullback on eating out amid rising prices for food and basic needs like rent and medical expenses.

Fiscal third quarter US same-store sales fell 2% on the back of a 4% traffic drop. Earnings per share declined 46% from the prior year. Operating profit margins plunged 660 basis points year over year.

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Investors are clinging to the positives Niccol noted during the earnings call in late July. They include low-double-digit percentage same-store sales growth at college locations, improved transaction trends in the US toward the end of the quarter, and a “wave” of beverage and food innovation over the next 12 months. It will also spend $500 million during the next year on increased labor investments — shy of Street whispers of about $1 billion.

The company even teased the potential to reach peak operating margins again.

Starbucks shares are down 10% year to date compared to a 14% advance for the S&P 500.

It will announce fourth fiscal quarter earnings later this month.

“What should have been an ‘own into the event’ type of print, with weak comparable sales/US store closures behind the brand and a major new sales platform recently launched (protein), the fiscal fourth quarter earnings set up has grown more complex given: (1) noise that closures may have muddied the protein launch, and (2) growing signs that broader industry demand has softened,” said Citi analyst Jon Tower in a note.

“This weakness, along with a still-pending decision on China, may mean management waits until a planned February 2026 investor day to offer fiscal year 2026 guidance alongside a long-term algorithm, and, without firm numbers to anchor on, share performance likely continues to track one-year US same-store sales data.”

Brian Sozzi is Yahoo Finance’s Executive Editor and a member of Yahoo Finance’s editorial leadership team. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email brian.sozzi@yahoofinance.com.

Each week, Yahoo Finance Executive Editor Brian Sozzi fields insight-filled conversations and chats with the biggest names in business and markets on Opening Bid Unfiltered. You can find more episodes on our video hub or watch on your preferred streaming service.