In a significant move, Starbucks (NASDAQ: SBUX) is bidding farewell to its Chief Financial Officer, Rachel Ruggeri, as part of ongoing efforts to revitalize the coffee giant. CEO Brian Niccol announced the departure in a letter to employees on Tuesday, marking the latest in a series of executive changes since he took the helm in September 2024.
Ruggeri, a 20-year veteran of the company who briefly served as interim CEO following Laxman Narasimhan’s exit, will be replaced by Cathy Smith. Smith brings a wealth of retail experience, having most recently served as CFO at Nordstrom since 2023, with prior stints at Target and Walmart International.
This leadership shuffle is part of Niccol’s broader “Back to Starbucks” initiative, aimed at refocusing the brand on its core coffee offerings, improving pricing strategies, and enhancing service speed. The plan comes in response to recent challenges, including a 7% drop in global comparable sales in late 2024, which has since shown slight improvement with a 4% decrease in early 2025.
Niccol’s strategy includes several key changes aimed at enhancing the customer experience and operational efficiency. The menu is being simplified by trimming it by 30% to streamline operations. Additionally, the in-store experience is being enhanced by reintroducing ceramic mugs and self-serve condiment bars. To add a personal touch, baristas are encouraged to include handwritten notes on cups. Furthermore, the mobile ordering system is being revamped with the goal of achieving a four-minute service time.
The company’s Q1 fiscal 2025 results, while meeting expectations, underscore the work still ahead. Revenue remained flat year-over-year at $9.4 billion, slightly above analyst estimates. Earnings per share fell 23% to $0.69, though this exceeded the expected $0.66.
Global same-store sales and foot traffic both declined by 4% and 6% respectively, marking the fourth consecutive quarter of decline. However, average ticket size grew by 3%, offering a glimmer of hope.
Niccol expressed cautious optimism about the initial response to the “Back to Starbucks” plan, noting positive feedback across all age groups. However, he acknowledged that “we still have much work to do”.
The leadership changes extend beyond the CFO position. Recent appointments include Mike Grams as chief stores officer and Meredith Sandland as chief store development officer, both bringing experience from Taco Bell. These additions coincided with the departures of Sara Trilling, former president of Starbucks North America, and Arthur Valdez, who served as chief supply and customer solutions officer.
As Starbucks navigates this transitional period, the success of Niccol’s strategy will hinge on effective execution and training across all locations. The company faces the challenge of balancing efficiency improvements with maintaining the premium experience that has long been a hallmark of the Starbucks brand. With these changes, Starbucks aims to reclaim its position as a community coffeehouse while adapting to evolving consumer preferences and market dynamics.
