Within Starbucks’ plan to accelerate service

The news came on Tuesday during the company’s investor day, when Starbucks (SBUX) leaders have spent hours outlining what the next few years will be like.
Schultz unveiled a broad version of the new plan in July via an open letter to employees, stating that “Starbucks’ business as built today is not set up to fully meet evolving behaviors, needs and expectations. of ours [employees] or customers. It is not designed for the future we aspire to for ourselves and the communities we serve. “

Frappuccini faster

Starbucks needs to catch up with its customers to accelerate growth. Over the years, “the business has changed dramatically,” Schultz said.

Customers are ordering more and more often via the company’s mobile app and drive-thrus. They are opting for cold drinks, which now make up the bulk of drink orders. Sometimes they also order TikTok-inspired concoctions so elaborate that they make a large vanilla iced latte look like plain black coffee.

These new consumption habits create complexity for employees tasked with preparing time-consuming recipes ordered in person, via an app or at the drive-thru. This means longer waiting times for customers if they decide to queue.

“One of our challenges today is that we are unable to meet the demand capacity that is coming through our stores,” said Brady Brewer, Starbucks chief marketing officer.

More efficient kitchens and new technologies can help bartenders work faster, alleviating those bottlenecks.

One of these improvements is called the Siren System, which among other features is designed to reduce the time it takes to prepare cold drinks. Faster blenders and new dispensers for ingredients like milk and ice are lined up, so bartenders can make the drink without bending over to get the milk or whipped cream under the counter.

The Siren System places the appliances above the counter, not below.

It takes baristas around 36 seconds to make a Frappuccino with Sirena, down from around 87 seconds on average with the traditional system. Siren also uses ovens that can heat food in batches, rather than individually, to deliver food to customers more quickly. Some stores are already using the system as part of a test, but Starbucks plans to start rolling it out more broadly in 2024.

The company also discussed a new coffee machine on Tuesday, which produces a cup of decaffeinated coffee or freshly ground regular coffee brewed in about 30 seconds without paper filters. The machines are expected to be in all locations in the United States within the next three years.

In addition to enhancing its current locations, Starbucks plans to open 2,000 new net stores in the United States by 2025, with the goal of creating a broad portfolio that includes drive-thru and delivery-only locations.

More rewards and better service

Technological improvements won’t stop in the kitchen. They are also coming to the mobile app.

Mobile orders have become an important part of Starbucks’ business. The company had approximately 27.4 million active members in the quarter ended July, up 13% year-over-year. It’s great when the app works.

“As many of you know, our mobile app has experienced a few brief disruptions in the past few months,” said Deb Hall Lefevre, Starbucks Chief Technology Officer, on Tuesday.

About a quarter of US sales go through digital channels, Lefevre noted. “Even a few minutes of downtime can mean… confusion in our stores and, of course, lost business opportunities,” she said. The company’s first priority is to make the app trustworthy, she said: “Things just have to work.”

Starbucks is also planning other improvements, such as allowing customers to use mobile orders and collect reward points when they visit a licensed Starbucks location. It is also working to show real-time order updates in the app, as well as a joint rewards program with other companies such as retailers or airlines.

At the drive-thru, Starbucks is working on “a frictionless payment program that will automatically recognize and authenticate our customers as they pass,” Lefevre said.

Starbucks also said this week that it will allow rewards members to purchase or earn NFTs starting at the end of the year.

“A deficit of trust”

These technological upgrades, both in bar kitchens and payment systems, are designed not only to improve customer service but also to support workers.

For Starbucks, making employees happy is an important part of the plan as it fights the growing unionization effort. As of Tuesday, the National Labor Relations Board certified unionization votes at 224 Starbucks stores and certified that 42 locations voted against unionization.

Starbucks has made it clear that it wants workers to deal directly with the company, rather than going through a third party.

“We have a lack of trust with our partners,” said Frank Britt, Starbucks’ chief strategy and transformation officer, on Tuesday. “We have not lived up to the highest level of obligations,” he said. “We plan to do quite a bit about it.”

Because the unions are having a moment right now

To that end, Starbucks said this week it will offer eligible employees support in managing student loan debt and help them set up savings accounts. Britt also said the company is working to offer workers more flexible scheduling options, with future plans that include more generous sick time and additional mental health support.

Starbucks said it can grant new benefits only to non-union employees.

But Starbucks Workers United, who led the campaign, remains indifferent to the company’s plan. The group organized a march outside the company headquarters on Tuesday to coincide with the investor event.

“Workers are delighted that Starbucks is taking an interest in issues relating to our working conditions; we have joined forces because we would like to have a real voice in this process,” the group said in a statement on the investor meeting. “We look forward to negotiating these conditions at the negotiating table.”

Correction: This story has been updated to clarify that Starbucks can only grant new benefits to non-union employees.

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