For most of a decade, the Starbucks near my office was a morning ritual. 

Venti iced coffee, splash of oat. Every weekday. For 10+ years. 

Then over the last five years, that quietly fell off a cliff. 

Maybe once a week. Then once every two. 

Then whole weeks would pass and I wouldn't even think about it.

Some of it was price, some was just behavioral changes (kids, getting busier, not living near the office anymore). But it was also that the store didn’t feel like anything anymore. 

You’d walk in, get ignored mostly, weave past the pile of cups and the handoff bar, and leave. 

There was no there there. Just a transaction.

Turns out the new CEO would say the same thing, in writing, in front of every shareholder he had.

Some quick context. 

Starbucks built its empire on premium coffee plus what the company branded as the "third place" experience: that somewhere-between-home-and-work feeling where you'd sit, hang out, get greeted by name. 

That promise was the brand, and a key part of the value prop. 

Then somewhere along the way, the company stopped protecting it. 

Stores started optimizing for mobile orders, drive-thru, customization, and price. Format mattered more than feel. The third place quietly became an assembly line. 

In August 2024, the board pushed out Laxman Narasimhan and brought in Brian Niccol, the guy who'd turned around Chipotle. On his second day, Niccol published an open letter that diagnosed the problem with unusual candor for a Fortune 500 CEO:

"There's a shared sense we have drifted from our core... it can feel transactional, menus can feel overwhelming, product is inconsistent, the wait too long or the handoff too hectic."

Some have called it "brand drift." 

I'd call it value-prop drift, which is a slightly different and an even more dangerous thing.

Every business has a few pillars holding up its value prop. 

For Starbucks, two of them were obvious: great coffee, and the third place “experience”. 

Take a sledgehammer to either one and the whole thing slowly could fall apart.

What's tricky is that the second pillar (warmth, familiarity, ritual) doesn't show up cleanly on a P&L and it’s incredibly hard to measure. 

Coffee costs hard-earned dollars. Furniture, lighting, that’s an expense. 

Pickup-only stores, mobile ordering, and Siren equipment? Those make a model look beautiful on a spreadsheet.

But making sure your staff is talking to customers, remembering their name, writing something on the cup? That’s a bit invisible and harder to discern. 

So a public company under quarterly pressure does the rational thing on paper: it doubles down on the visible pillars and lets the invisible one rot. 

Eventually somebody opens an open letter and admits the obvious.

And trust me when I say this isn't only a giant-company problem.

I've seen startups do a version of this too, usually once growth slows or the founders get too antsy about an exit (hence the need for more EBITDA). 

You start pulling levers that look good in the model and quietly erode the thing customers loved you for. 

Here's a way of phrasing it that really rings true: Starbucks preserved dollars longer than it preserved affinity.

Look at the financial fingerprint. 

Through fiscal 2024, revenue still grew. Comparable store sales went negative, but average ticket stayed positive. Transactions, however, were falling off a cliff. Down 4% for the year. Down 8% in Q4 FY24. Still negative through most of FY25.

Translation: fewer people coming, but the ones who came were spending more, mostly because Starbucks kept raising prices.

If you only looked at revenue, the business looked fine. If you looked at who was coming and how often, the business was bleeding out.

This is the trap. Price hikes can mask weakening demand for a remarkably long time, especially in any business with even a hint of pricing power. 

You feel something's off in your gut. But hey, revenue's up. So you ignore it. 

Don't ignore your gut.

Revenue is a lagging indicator. It tells you what already happened. By the time it's flashing red, the underlying customer behavior shifted 12 to 24 months ago.

What you actually want is the leading indicator for your specific business. A few examples:

The whole skill is picking the right one and trusting it even when the lagging number disagrees.

The verdict's not in. But the early signals are solid.

Q4 FY25 was the first positive global comp in seven quarters. 

Then Q2 FY26 came in at +6.2% global, +7.1% in the U.S., on actual transaction growth. 

That's the right kind of growth, not the price-cover-up kind. Niccol added staff, killed the non-dairy surcharge, brought back ceramic mugs and free refills for customers staying in the store, and simplified the menu. 

He explicitly said he'd rather invest in baristas than in more equipment.

Anecdotally? I can feel it.

Last week I had an iced coffee delivered, and someone named Lauri had written on the cup, "Enjoy. Have a great day, Lauri." Two minutes later I happened to drive past the store, walked in, found her, handed her a tip, and we had an actual conversation.

That doesn't happen at an assembly line for caffeinated drinks.

If I had to bet on this Starbucks versus the one I quietly stopped going to, this one's just way more fun to bet on.

If you liked this blog post, you might enjoy this other one on i why i buy high & then buy even higher.

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