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By Juveria Tabassum and Waylon Cunningham
(Reuters) -Starbucks reported a smaller-than-expected fall in first-quarter comparable sales on Tuesday, in early signs of the struggling coffee chain benefiting from CEO Brian Niccol's efforts to revive demand.
The company's shares rose 0.5% in extended trading. They have gained nearly 30% since his appointment in August last year.
"It's a critical year in front of us, and we have a lot of work to do to get back to Starbucks," Niccol said.
Niccol is credited with reviving the burrito chain Chipotle Mexican Grill in his last CEO role. He aims to return Starbucks to its coffee house roots in the U.S. by rolling out a simpler menu, ceramic cups, refills and condiment bars, and cutting wait times at the cafes to under four minutes.
He said Starbucks' current system of mobile ordering, which handles orders on a first-in, first-out basis, is a "chokepoint" that can overwhelm baristas and the primary obstacle to achieving shorter wait times. A more efficient mobile order system "frees us up to another degree that we haven't totally comprehended," he said.
Doing so could help realize the company's potential to eventually double its store count in the U.S., Niccol said.
Niccol has also cut back on the company's deals and discounts and instead sought to broaden its marketing beyond loyalty program members.
Starbucks' global same-store sales fell 4% in the three months ended Dec. 29, Niccol's first full quarter at the helm, compared with analysts' expectations of a 4.6% fall, according to data compiled by LSEG.
"Investors are looking for early indicators that the transformation is in place. The results were broadly in line with expectations," said Danilo Gargiulo, senior analyst at Bernstein.
The company has also shuffled its top brass. Earlier on Tuesday, Starbucks said its North America president Sara Trilling and chief supply chain officer Arthur Valdez would leave.
Trilling's role will be split, with former Taco Bell executives Mike Grams and Meredith Sandland becoming North America chief stores officer and chief store development officer, respectively. Niccol was a former top boss at Taco Bell before joining Chipotle.
"Brian is being surrounded by people he trusts. The appointments are paramount to ensure execution of in-store revisions," Gargiulo said.
Starbucks, which suspended its forecasts for 2025 late last year to give Niccol freedom to pursue his restructuring, has ceded ground to rivals such as Luckin Coffee in China, where comparable sales fell for the fourth straight quarter.