Dive Brief:
- Starbucks is building a menu innovation pipeline composed of premium coffee options, non-coffee drinks and artisanal food, CEO Brian Niccol said on the chain’s fiscal Q3 earnings call.
- Many of the brand’s menu additions will have significant protein content, or other nutritional features designed to appeal to health-conscious consumers. For example, Niccol said the chain will introduce a protein Cold Foam customization.
- Starting next year, the chain will launch a new baked goods case, a new variety of dark roast coffee and other menu changes, with a particular focus on experiential drinks and afternoon snacks, Niccol said.
Dive Insight:
Some of Starbucks’ food innovations could come from tests in other markets. Canada has been a strong food market for the chain in recent months, selling pancakes and waffles and will begin to serve bagel bites soon, Niccol said. Food innovation is helping to drive same-store sales growth.
“There is [an] opportunity for us to figure out what they’re doing up in Canada from a food standpoint to figure out what makes sense for us to bring not only to the U.S. but around the world,” Niccol said.
From a drinks standpoint, Starbucks will test alternatives, such as coconut water-based tea and coffee drinks in select markets, Niccol said.
“We’ll lean into customer needs with upcoming tests of gluten-free and high-protein options to create food that’s as artisanal as our beverages,” Niccol said.
The combined focus on ingredients, like coconut water and added protein, place Starbucks’ new strategy squarely within the major menu trends in restaurants. Premium coffee concepts that focus on on-premise experiences are doing well, while consumers are looking for healthy-seeming inclusions, like protein and fruit, in new drinks.
Simultaneously, the growth of caffeinated beverages other than coffee is creating new daypart opportunities. With QSR chains like McDonald’s and Yum Brands focusing on new drinks development, Starbucks may be looking to preserve its position as a go-to beverage chain from new entrants seeking to capitalize on shifting consumer sentiment.
Starbucks is standardizing its menu test process by rolling out new items in five stores, a shift the chain calls the Starting 5.
Niccol said the aim of the Starting 5 is to ensure “innovation is being co-built with our baristas in our stores, versus we build it in the support center, we throw it over the wall, and we hope that our baristas can figure it out.”
The coffee giant will do its menu development in conjunction with its field teams and baristas from now on in an effort to prevent new drinks and additions — like the protein Cold Foam — from adding unnecessary operational complexity.
That Cold Foam will come with 15 grams of protein per serving in Q4. Sales of the original Cold Foam modifiers rose 23% year over year.
Niccol said that during the protein Cold Foam development process, Starbucks “tapped into our baristas to help us fine-tune the program so that it’s executed in a way that can be a great drink every time on the speed requirements that our customers expect.”
The menu additions follow a campaign of simplification earlier this year that, when it was announced, was forecast to trim about 30% of the chain’s menu. Niccol said that simplification was necessary to reduce the labor demands of the menu and free up space for new menu items.
