Starbucks is poised to announce its most significant drop in sales since the pandemic began, as cautious American consumers are turning away from the chain’s $5.95 lattes.

In preliminary results released unexpectedly on Tuesday, the coffee retailer revealed that global same-store sales had declined by 7 percent during the fourth quarter, leading to the suspension of its annual forecast.

The decline was primarily driven by a 6 percent drop in comparable sales in the United States, Starbucks’ largest market.

Over in China, same-store sales saw a steeper fall of 14 percent due to increased competition and a sluggish economy affecting consumer spending habits.

Following this announcement, Starbucks’ shares fell by $3.66, or 3.8 percent, to $93.16 in after-hours trading. This reported drop in same-store sales marks the steepest decrease since the fourth quarter of 2020, when pandemic restrictions resulted in a 9 percent decline. Overall revenue for the fourth quarter fell by 3 percent to $9.1 billion.

The coffee retailer has committed to enhancing its customer experience under the leadership of Brian Niccol, who transitioned from Chipotle Mexican Grill to assume the role of chief executive in September. Niccol took over from Laxman Narasimhan, who resigned after just over a year due to decreasing sales.

Starbucks announced the halting of its annual forecasts for the year ending September 2025, citing the change in chief executive and the current operational status of the company.

Rachel Ruggeri, the chief financial officer, commented, “Despite our increased investments, we were unable to alter the pattern of our declining traffic, which has affected both our revenue and profit.”

“We are crafting a strategy to revitalize our business, but it will require time,” she added.

Niccol emphasized that the recent results underscored the necessity for a complete strategic overhaul to regain growth.

In a pre-recorded video on Tuesday, he outlined plans to focus on revitalizing growth in the U.S. market by enhancing the customer experience, particularly during morning rush hours.

He stated, “We will streamline our overly complicated menu, adjust our pricing structure, and ensure that every customer feels their visit to Starbucks is worthwhile.”

Niccol also noted the importance of providing baristas with “substantial career development and top-tier benefits” to position Starbucks as a leading employer in the retail sector. He promised to resolve staffing challenges, eliminate inefficiencies, and simplify operational processes for baristas.

“We are reorienting our efforts to guarantee that we serve a high-quality, handcrafted beverage promptly and with care, handed directly to customers by our baristas,” he said.

Additionally, the company plans to revamp its mobile ordering and payment system to improve the overall café experience.

Critics have pointed out that Starbucks has strayed too far from its origins as a communal gathering space for coffee lovers. Plush leather seating has been replaced with wooden furniture, and baristas often appear too occupied juggling in-store, app, and drive-through orders to engage with customers.

“Even if customers don’t choose to linger in the café every time, we understand they expect our locations to embody the feel of their beloved neighborhood coffee house,” Niccol remarked.

With significant expectations from investors, Niccol’s base salary is set at $1.6 million per year, complemented by an annual cash incentive reaching up to 225 percent of his base pay, with a maximum potential of 450 percent.

He is also in line to receive annual stock options valued at approximately $23 million, and his contract could amount to around $113 million upon meeting Starbucks’ performance targets.