Starbucks’ Red Cup Day Kicks Off the Holidays Amid CEO Brian Niccol’s Turnaround Plan

<img decoding="async" class="size-full-width wp-image-1600208" src="https://observer.com/wp-content/uploads/sites/2/2025/11/GettyImages-496970102.jpg?quality=80&w=970" alt="A Starbucks red cup on the table.” width=”970″ height=”647″ data-caption=’Brian Niccol leads Starbucks’ turnaround with a focus on efficiency and customer experience. <span class=”media-credit”>Spencer Platt/Getty Images</span>’>

Starbucks kicks off its annual Red Cup Day today (Nov. 13), marking the start of the holiday season. This year, customers can receive a limited-edition reusable red cup with the purchase of a holiday drink. However, the festive mood is tempered by ongoing strikes at 65 U.S. stores, organized by unionized workers. The strikes highlight the challenges facing CEO Brian Niccol’s ambitious turnaround plan for the iconic coffee chain.

Niccol took over as CEO in September 2024 after leading Chipotle and Taco Bell. He is credited with restoring Chipotle’s reputation following a 2018 food safety crisis. Now, at Starbucks, he’s tasked with reversing the company’s recent decline.

Niccol stepped into his role at a time when Starbucks was facing significant challenges. Foot traffic dropped 10 percent in 2024, and declining sales had become a persistent trend. Contributing to the downturn were factors like an uninspiring menu—punctuated by a few meme-ified attempts at innovation, including the stomach-ache-inducing olive oil latte—and difficult working conditions caused by increasingly complex orders. Customers also cited a cold, transactional atmosphere that left them feeling disconnected from the brand.

“There’s a shared sense that we have drifted from our core… A visit to Starbucks can feel transactional, the menu overwhelming, the product inconsistent, the wait too long, or the handoff too hectic. These moments are opportunities for us to do better,” Niccol wrote in an open letter when he took the reins.

Since assuming leadership, Niccol has vowed to bring Starbucks back to its root as the community coffeehouse. Under his direction, Starbucks has invested $500 million in additional labor hours to improve customer service and working conditions. The company has simplified its menu, cutting more than a quarter of food and beverage items to reduce complexity. Stores are being redesigned to encourage longer visits, featuring more comfortable seating, ceramic mugs for dine-in, and handwritten barista notes.

Despite these efforts, sales have remained flat during Niccol’s first year. However, the company’s most recent quarterly results show signs of improvement. From June to September, revenue rose 3 percent to $37.2 billion, and comparable sales increased by 1 percent. CFO Cathy Smith noted that this marked the first sales growth in seven quarters.

“These results demonstrate meaningful progress we’ve made on our Back to Starbucks plan,” Niccol said during the company’s fourth-quarter earnings call last month. “They reflect the early impact of our investments in customer service, store redesign, and a revamped marketing and menu strategy.”

While some see early signs of success, others remain skeptical. Jason Tassie, founder of Know Your Business, argues that Starbucks faces cultural challenges, particularly with younger customers who increasingly favor independent cafés. “Customers want smaller, local players and community-driven spaces,” he told Observer. “Global chains struggle to replicate that.”

However, Starbucks’ strong digital loyalty system remains a key advantage over independent shops. Mia Umanos, CEO of Clickvoyant, noted that while the company’s data-driven approach has been effective, it risks losing the human touch that originally endeared customers to the brand. “You can’t data your way into belonging,” Umanos told Observer. “But you can use data to create better human experiences.”