Burritos to Baristas: How Will Niccol Tackle Starbucks' Unionization Challenge?
Why Brian Niccol Was the Right Choice for Chipotle’s Turnaround
Chipotle’s food-safety fiasco shook customer confidence to its core, dealing the burrito chain a 6.8% tumble in revenue and a 14.6% drop in comparable restaurant sales. Mending the brand’s battered reputation soon became an existential priority. Yet changing consumers’ minds proved a steep uphill climb, in part because of behavioral foibles such as confirmation bias, which prompt people to seek evidence that reaffirms their views and reject anything that contradicts them. As SEO specialist Sarah Presch notes, consumers tend to double down on preconceived notions rather than revise them. This psychological quirk was at the heart of Chipotle’s decision to hand the top job to Brian Niccol.
Revitalising a brand rarely comes cheap, and success is hardly assured. Tropicana and JCPenney can testify to that: the orange-juice maker’s rebranding wiped out 20% of sales and caused a $30m loss, while the department-store chain’s reinvention saw a 25% drop in sales and a $985m loss. Both episodes underscore how crucial it is to clarify precisely why—and for whom—an overhaul is launched. Niccol, for his part, steered Chipotle out of trouble with his “For Real” campaign, which persuaded diners to give the chain another chance. A 7% revenue bump in 2019 and a 60% surge in its share price attested to his knack for corporate rescue.
Strategy for Starbucks: Financial Stability Before Labor Solutions
His latest test is Starbucks, whose union headaches have lingered for years, predating even Howard Schultz’s tenure. By October 2024 some 11,000 Starbucks workers at over 525 outlets had taken to the picket lines, demanding better pay, benefits and an end to unfair labour practices. Long-standing operational shortfalls have only added to the company’s woes. Merely one-third of baristas say their stores remain adequately staffed, and a surge in online orders during rush hours has inflamed wait times and customer frustration. Agreement with unions, it seems, is some way off.
Niccol’s initial focus has been to shore up Starbucks’ finances rather than untangle its fraught labour relations. This decision looks logical given the firm’s sagging bottom line: in the fourth quarter of 2024, Starbucks reported a -3.2% dip in revenue growth, while its operating margin fell from 17.18% the previous year to 13.52%, owing to a 6% jump in operating expenses. Echoing his Chipotle playbook, Niccol is rolling out a “Back to Starbucks” push—a mix of brand-burnishing and revenue-building designed to restore trust among customers and calm anxieties on Wall Street.
Raising revenue should create enough leeway to settle wage squabbles without gnawing at profit margins. He employed a similar tactic at Chipotle, where he lifted menu prices and diversified income streams, lowering labour expenses from 25.5% of revenue in 2022 to 24.7% in 2023 while still honouring a $15 hourly wage.
Once Starbucks’ financial footing is steady, Niccol could then move on to union concerns, from workforce scheduling and staffing to better training and employee benefits. At Chipotle he partnered with Guild Education to offer debt-free study programmes, improved paid leave for both parents, introduced a Crew Bonus Programme tied to store results, and set up an Employee Assistance Programme offering counselling, financial guidance and legal advice.
If Starbucks follows the script from Niccol’s burrito days, it may yet soothe its disgruntled baristas—and ensure a more harmonious future for the brand.