Starbucks' new CEO, Brian Niccol, has introduced two major changes that have helped bring customers back to the coffeehouse chain, though challenges still remain. Niccol's strategy, which includes upgrading stores and increasing marketing efforts, has led to a steady increase in sales. In the fiscal third quarter ending June 28, sales rose by 7.9%, marking the fourth consecutive quarter of growth. However, the costs related to his "Back to Starbucks" plan have reduced profit margins. The operating margin dropped to 12.9% in the third quarter, compared to 15.8% two years ago. In North America, Starbucks' main market, margins fell from 21% to 13.6%. Niccol took over in September 2024 when Starbucks was going through three consecutive quarters of declining sales. The decline was due to long wait times, ineffective promotions, and a complex menu. Sales continued to drop for three more quarters before turning around. Focusing on improving the customer experience rather than short-term profits, Niccol invested hundreds of millions of dollars in hiring more staff to reduce wait times and renovating stores to bring back the classic coffeehouse atmosphere that helped build the brand. This strategy mirrors the approach he used at Chipotle Mexican Grill, where he fixed operational problems and revived growth after a food-safety crisis. Under Niccol's leadership, Starbucks has also boosted its promotional efforts, including a high-profile product placement in the movie "The Devil Wears Prada 2." When Niccol was first appointed, Starbucks' stock rose 24%, and it has gained 30% since then. While this is less than the roughly 40% rise of the broader S&P 500 index, it outperforms rival chains like McDonald's and Chipotle over the same period. "If the customer isn't happy, it doesn't matter what the stock metrics say," said Jake Dollarhide, CEO of Longbow Asset Management, who is an investor in Starbucks. Dollarhide remained skeptical about the turnaround until service speed improved noticeably over the past six months. Niccol is already preparing for the next phase of restructuring by offering stock awards to executives tied to cost-reduction goals through fiscal 2027. Starbucks has closed hundreds of locations, including its famous Seattle roastery, and eliminated some corporate positions. In China, the company gave up control of its operations this year to help boost growth against low-cost competitors like Luckin. This move shows how Niccol's changes have positioned the brand well to turn stronger sales into higher profits, according to analyst Jim Sanderson from Northcoast Research. Despite these efforts, challenges still remain. Starbucks has not yet finalized a labor contract with its U.S. barista union, which organized a consumer boycott in August. The company has also faced scrutiny over its labor practices and recently canceled an AI inventory system meant to solve ongoing supply issues. However, Wall Street remains mostly positive. "I'm impressed with how he takes full responsibility for his mistakes and is not afraid to pivot," said Dollarhide.