Starbucks CEO says better pricing transparency necessary for mobile app

Starbucks CEO Brian Niccol believes the company's app isn't transparent enough on pricing. He wants to fix that. 

"I don't think right now it's very transparent for people to understand when they're modifying their drink, how that modification translates into their drink price," Niccol told FOX Business digital in an exclusive interview.

One of the things the company is working on is showing customers in real time how their drink order price increases when they add extras, like an additional pump of flavor, Niccol said. Currently, a customer using the app can only see the total price of their order when they are reviewing it prior to the checkout screen.

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The Starbucks chief said that it will take the company "a little bit of time to do the rewiring." The goal is to ensure customers aren't caught off guard when it comes time to pay.

"I think what's happening to folks is they're getting a little surprised when they do three or four customizations, and it's not clear to them how those customizations are priced," said Niccol, who took over as CEO in August to reverse the coffee giant's declining traffic and create a better environment for workers.

In assessing the app, the company also has the opportunity to "fix the logic on what those customizations are being charged," he added. 

Specifically, the company aims to assess which modifications and customizations should incur additional charges and which should be included, while ensuring transparency in how this is communicated. 

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The company already decided not to charge for alternative milk, a decision he announced within two months of assuming his new role, emphasizing his goal to make swift decisions. 

Niccol didn’t specify which other items the company would no longer charge for. Still, he mentioned the company is "working through" the right pricing structure for other options such as flavor additions, espresso shots or cold foam.

Niccol noted that at Chipotle, where he served as CEO from 2018 before moving to Starbucks, consumers could modify their order, though if they wanted anything extra, they were charged for it. He specifically highlighted how Chipotle made clear what were considered add-ons versus what things are modifications, he said. 

"I think we need to do a better job of being transparent about that for our customers. And I think that will really help the pricing architecture. And also people will understand like, okay, this is really worth it," he said.

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Though Niccol is just about four months on the job. He is using his prior experience running Chipotle and Taco Bell to drive more traffic back to Starbucks. 

Ticker	Security	Last	Change	Change %
SBUX	STARBUCKS CORP.	102.46	+0.95	+0.94%

Aside from noting that the company will simplify its "overly complex menu" and fix its pricing structure, Niccol announced the company intends to revert the cafés back to their former "coffee house" aesthetic with "personal touches," including serving coffee in ceramic mugs for customers who dine-in. 

The condiment bar is making a comeback next year and the company is reintroducing Sharpies, both of which are a nod to its earlier days.