Starbucks will remove Oleato from the menu when it debuts its holiday lineup in November. | Photo courtesy of Starbucks
Starbucks customers in need of a double diuretic in the morning will soon need to look elsewhere.
Starbucks on Tuesday confirmed a Bloomberg report that it plans to remove its olive oil-infused Oleato coffee from its menu in November, less than a year after the product line was expanded nationally.
The beverage will be removed from Starbucks’ menus in the U.S. in their entirety, including at the company’s more innovative Reserve stores. It’s uncertain what will happen with the drink in international markets such as Italy, where Oleato is served at some locations.
The decision to remove Oleato was made before Brian Niccol took over as CEO. But it also follows with the company’s plan to simplify its menu, a plan that Niccol highlighted in a recent video explaining some strategies following the chain’s pre-release of fiscal fourth-quarter earnings results. “We will simplify our overly complex menu,” Niccol said.
(Check out our analysis of some of the plans that Niccol mentioned in the video.)
The move will erase one of the stranger decisions during Howard Schultz’s third and most brief tenure as the Starbucks CEO.
Schultz returned to the chain following the retirement of Kevin Johnson and immediately went to work on a strategy to improve operations in the stores, particularly for the baristas who work inside the company’s shops.
But he also pushed through a new platform, called Oleato, that featured olive oil infusions in the company’s espresso-based beverages and foams. The creation arose out of one of Schultz’s visits to Italy, in which he would take a spoonful of olive oil every morning and soon began mixing it with his coffee.
That line would prove divisive, in part because olive oil in coffee is not exactly a common practice, certainly at a major coffee shop chain. Both caffeine and olive oil are also diuretics.
The line received mixed reviews. At the same time, the platform seemed to run counter to a strategy of improving operations.
Starbucks over the years has added numerous add-ins to its beverages, including dairy and non-dairy creamers, sweeteners and flavorings, in addition to foam, whipped cream and other toppings. The add-ins generate big business—sales of mix-ins generate $1 billion in revenue per year.
But those beverage modifiers, on top of the various platforms the company offers plus its seasonal drinks such as the Pumpkin Spice Latte or the Peppermint Mocha, can lead to an unfathomable number of beverage combinations. Starbucks puts the number of potential combinations at 170,000. The publication Bloomberg says it’s a bit higher than that: 383 billion.
Either way, the extensive number of potential combinations has stressed baristas, who have taken to social media to gripe about some famously extensive drink combinations. And that complexity, on top of the growth in mobile ordering, has made life more difficult inside stores.
Starbucks has struggled with weak same-store sales since November, including a 6% decline in the U.S. last quarter with a 10% decline in transaction count. Weak sales this year prompted the company to bring Niccol in from Chipotle, the first time Starbucks had ever brought in a restaurant chain executive from outside the company to be its CEO.
Much of the discussion on that sales performance has centered on Starbucks’ complex operations and the conflict between its desire to serve more takeout customers and its desire for its stores to be more experiential.
But it’s also the type of performance that often has restaurant companies rethinking their menu strategies as they remove weaker selling items to improve operations and profitability. This is one of those times.
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