You’re 7th in the drive-thru line. Your mobile order for a simple cold brew was supposed to be ready 5 minutes ago. You’re late.

Starbucks knows this exact feeling is killing its business.

After watching sales slide for six straight quarters and profits get sliced nearly in half, the company is making its “biggest investment ever” to fix it. But the solution isn’t better beans or friendlier baristas. It’s an algorithm designed to get a drink in your hand in under four minutes, and they're spending over $500M to make it happen.

 Deals

Palo Alto Networks Nears Over $20 Billion Deal for Cybersecurity Firm CyberArk

Industry News

Mars to Invest $2 Billion in U.S. Manufacturing Through 2026

Can Bernard Arnault steer LVMH out of crisis?

World

Should we be alarmed or optimistic about Japan’s debt?

In fiscal Q3 2025, Starbucks dropped a bomb on Wall Street. Net income didn’t just dip; it plunged 47% to $558M. That’s the kind of number that makes a CFO spit out their latte.

This wasn’t a fluke. It was the sixth straight quarter of declining sales, a streak not seen in over 15 years.

The problem wasn't the coffee. It was the chaos. Years of prioritizing mobile orders turned the once-cozy "third place" into what one Redditor called a "get-your-shit-and-go hellscape." The very tech that fueled its growth—the mobile app—had created a logistical nightmare, paralyzing baristas and leaving customers fuming over cold, forgotten drinks.

When your $106B ship is sinking, you call a plumber. Enter Brian Niccol, the C-suite's resident "fix-it" expert.

Niccol is the guy who made Taco Bell cool again with Doritos Locos Tacos and, most famously, resurrected Chipotle from its food-safety apocalypse, sending its stock soaring 770%.

He doesn't mess around. His playbook is a masterclass in operational rigor, and he's running the exact same plays at Starbucks:

Critics argue his success comes from aggressive price hikes and inheriting brands at rock bottom. They also point to his massive pay package (6,666x that of a part-time barista) as a sign he's more of a "union buster" than a brand savior.

But the board made its choice. They didn't hire a coffee lover; they hired an engineer. The bet is that the problem isn't a lack of soul, but a broken machine.

Niccol’s master plan is called "Green Apron Service," a fascinatingly contradictory strategy to fix Starbucks with both a human touch and a robotic stopwatch.

Part A: The Human Touch. The goal is to bring back the warm, neighborhood cafe vibe.

Baristas are writing names on cups again (requiring a bulk order of 200,000 Sharpies).

"For here" orders are served in ceramic mugs.

The company flew 14,000 managers to Las Vegas for a "Leadership Experience" focused on "unreasonable hospitality."

Part B: The Algorithm. The other side of the plan is a strict mandate: deliver drinks in under four minutes.

The key is a new order-sequencing algorithm, reportedly built by a tiny team of six engineers. This "ghost in the machine" intelligently sorts orders from the counter, drive-thru, and mobile app.

In a crucial shift, the algorithm now prioritizes in-person orders, while mobile orders are slated for a longer (but more realistic) 12-to-15-minute window. Early pilots have already shaved two minutes off the average prep time.

The View from the Floor

On paper, it's brilliant. In reality, it's… awkward.

A new "Green Apron Host" role was created to chat with waiting customers. Baristas on Reddit call the interactions "forced" and "draining."

The biggest frustration? The host is often forbidden from actually helping make drinks, even when the team is "drowning" in orders. As one barista put it: "Being a fast food restaurant at the same time as being a chill cafe is not working."

This reveals the real strategy: The host isn't there to speed things up, but to manage your emotions while you wait. A friendly chat makes the wait feel shorter and less frustrating. It's a clever human buffer for a systemic, algorithmic problem.

While Starbucks tries to fix its soul in America, it's fighting for its life in China, its second-biggest market.

Revenue has slid from a $3.7B peak to just $3B, and it's getting pummeled by local rival Luckin Coffee.

Luckin is the comeback story of the decade. After a massive accounting scandal in 2020, it was left for dead. Today, it operates over 24,000 stores in China to Starbucks' ~7,800.

Luckin’s model is the anti-Starbucks: tiny, grab-and-go outposts built for speed, delivery, and low prices, all powered by a seamless app.

Starbucks is now in retreat, forced to:

The final irony? Luckin just opened its first two stores in Manhattan—one of them 200 feet from a Starbucks—and is matching Starbucks' premium prices. They know the playbook that works in one market doesn't work in another.

The Customer Isn't Always Right (But They Have All the Money)

So, what do customers want? It's complicated.

Inflation is real. A $7 Frappuccino is an easy cut when groceries and gas prices are soaring. Fewer people are buying, even if those who do are spending more per visit.

The Gen Z & Millennial paradox. These younger customers are the brand's biggest fans, but they don't seem to care much for the coffee. They're there for the highly customizable, Instagram-friendly drinks.

Cold beverages now make up a staggering 76% of all U.S. beverage sales.

This reveals a deeper truth: Starbucks is no longer just a coffee company. It has become a high-end customization platform for personalized beverages. Its business model is less like a cafe and more like a video game character creator, where the real money is in high-margin modifiers like syrups, sauces, and Cold Foam (sales of which are up 23%).

Niccol's challenge isn't to fix the coffee. It's to build a more efficient platform for this powerful culture of customization, while wrapping it in the comforting aesthetic of a neighborhood coffee shop to justify the premium price.

Niccol is attempting to re-engineer an operational engine while performing a soul transplant. This turnaround doesn't come cheap. The company is spending over $500M on wage increases alone, crushing its operating margins.

But there are glimmers of hope:

The road ahead is risky. Niccol is betting that the tools of fast food—algorithms, standardized processes, and operational discipline—can recreate the feeling of a premium coffeehouse.

If he succeeds, he'll write a new playbook for 21st-century retail. If he fails, Starbucks may end up as a brand that's too expensive to be fast food, and too soulless to be a "third place."

Have a Question? Let's Hear It!

I love building this newsletter with you in mind, and my favorite part is hearing from you directly.

Have a burning question, a great idea, or a thought you'd like to share? Send it my way! I'll pick some of our favorite submissions to answer and feature in next week's edition.

>> Click Here to Share Your Thoughts <<

P.S. I read every single submission! Let me know if you'd prefer to remain anonymous.

See you next week,

— Matt

P.S. If you enjoy my emails, move them to your primary inbox and let me know by sending a reply or clicking the poll below. I read every response.