- Starbucks saw U.S. comparable store sales drop 4% yr over yr in Q1 fiscal yr 2025, per its latest earnings report. Marketing investment is one lever the chain is pulling to stabilize the business and prime it for future growth, said CEO Brian Niccol on an earnings call this week.
- A subject of debate was how Starbucks is reallocating budgets from discounting into marketing. The chain is “close to doubling” its marketing spend as a percentage of revenue, explained Rachel Ruggeri, executive vp and CFO, on the decision.
- Brand marketing designed to reach a broader consumer audience is a key a part of the chain’s “Back to Starbucks” turnaround strategy.
Starbucks’ first full quarter under recent CEO Brian Niccol showed that while the chain is struggling, with comparable store sales declining and consolidated net revenues flat compared to the prior yr, there’s a path forward for the beleaguered coffee chain.
“To be clear, these results have room for improvement, but I’m confident the disciplined investments we’re making in labor, marketing, technology and stores this fiscal yr will help stabilize the business and position Starbucks for future growth,” Niccol said on the earnings call.
Starbucks executives repeatedly called out how marketing is a component of its “Back to Starbucks” turnaround plan, which is built around reintroducing the brand, delivering higher customer experiences within the morning, reestablishing Starbucks as “the community coffeehouse” and making the corporate a greater place to work.
During the quarter, Starbucks shifted further away from discounting and unveiled marketing efforts with a broader appeal that aim to position the brand as a purveyor of premium coffee and a premium experience.
Some of its marketing spend has been put behind the chain’s latest 30-second ad, which began airing on linear TV this past weekend. The business is a component of what Niccol called a shift into “working dollars for the brands and the brand experience.” The spot, set to The Ting Ting’s song “That’s Not My Name,” focuses on how Starbucks baristas write names and messages on customer cups, “a key point of difference” for the brand, the chief said.
The ad is the primary work from Stagwell-owned agency Anomaly, which Starbucks enlisted earlier this month to handle its U.S. creative work. The move got here just months after the chain had appointed WPP, which had established a bespoke Team Starbucks unit for the project. The initial agency appointment got here just before the chain named Tressie Lieberman as its first global chief brand officer.
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