Why Starbucks' New Direction Will Mean Fewer Discounts For Customers

Starbucks has a new CEO, and it means big changes for the brand — and customer's wallets. On Saturday, the Wall Street Journal revealed that Brian Niccol, who joined the brand in August, is planning to cut back on discounts in a shift towards a more premium experience. It's a sharp turn from the brand's previous strategy. The chain had been using deep discounts to lure customers in despite steep inflation.

Starbucks wasn't alone in offering discounts. Recently, other chains have been using sales to combat customer complaints over rising prices. McDonald's introduced a $5 meal in June to help combat the bad press.

But Niccol hopes to bring the brand back to its status-symbol roots. He also hopes that the changes will make work easier for employees, who reportedly disliked the influx of deals. Often, the deals led to long wait times — which came with drooping Starbucks sales. Reportedly, Niccol's promises to streamline operations brought cheers from employees during a recent forum.

Bryant Simon, author of "Everything But the Coffee," a book on Starbucks in American culture, discussed Starbucks' shift from status symbol to go-to coffee spot with Forbes in 2021. "It lost its cachet as a high end spot ... You can't be a high-end product and be everywhere," Simon said. When asked about Starbucks' luxe Starbucks Reserve roasteries, he called them "advertisements." "Whether they make money or not," Simon said, "they need to be there as a symbol of Starbucks' authenticity and knowledge of coffee."

But middle-class customers have come to rely on Starbucks as their go-to spot for a decent cup of joe — and they might not appreciate the shift away from budget-friendly offerings. When Simon spoke to Forbes in 2021, he approved of the fast food-esque strategy the brand was taking at the time. "If I were Starbucks ... I'd put a Starbucks at every rest stop on the highway, airport, and train station. It'd be the place that people recognize for a decent cup of coffee," he explained. It remains to be seen whether Americans will accept Niccol's pivot towards the premium experience, especially in an uncertain economy.