As incoming CEO Brian Niccol prepares to take the reins at Starbucks, one of the core issues he will need to address is the problem of operational inefficiencies plaguing the coffee giant. The mobile ordering system, which accounts for roughly one-third of Starbucks’ total sales, has created a bottleneck that is frustrating both customers and baristas. Mobile orders, often more complex with add-ons like cold foam or syrups, take up more of the baristas’ time, leading to longer wait times and dissatisfaction among customers.
Once considered a “third place” between work and home, Starbucks has lost its reputation as a place for customers to linger and enjoy their coffee. With the rise of mobile ordering, more customers are opting for convenience over the traditional cafe experience. Former CEO Howard Schultz highlighted this shift in consumer behavior, noting that Starbucks failed to make significant adjustments to its operations to anticipate this change. Under previous leadership, Starbucks invested in technology to boost digital sales but neglected the operational challenges posed by the mobile app.
The rise of digital orders at Starbucks has not only impacted customer experience but has also added pressure on baristas. Burnout among employees, fueled in part by the app, has led to some employees unionizing in an effort to address these issues. Digital sales have become a critical area for Niccol to focus on, with shareholders urging him to address the wait times for both in-store and mobile orders to enhance the overall customer experience.
Drawing a comparison with Niccol’s current employer, Chipotle, provides valuable insights into handling digital sales effectively. Chipotle’s proactive approach to online ordering, such as installing second prep lines dedicated to digital orders and introducing drive-thru lanes for online order pickup, has resulted in a seamless customer experience. By leveraging promotions, rewards programs, and digital-only menu items like quesadillas, Chipotle has successfully boosted digital sales without compromising on operational efficiency.
Starbucks has taken steps to address its operational challenges, including introducing a reinvention plan under Schultz’s leadership to tackle bottlenecks through new equipment and other measures. However, the slow rollout of new machines and processes has hindered progress in improving service speed. Niccol will need to expedite these initiatives to reduce both service times and the strain on baristas. By providing transparency to customers about the progress of their orders through the mobile app and implementing efficient processes like the “Siren Craft System,” Starbucks can enhance the overall customer experience.
The critical analysis of Starbucks’ operational issues highlights the urgent need for Niccol to revamp the company’s approach to mobile ordering and customer service. By learning from the successes of Chipotle and implementing efficient solutions to streamline operations, Starbucks can regain its reputation as a top coffee destination. Niccol’s credibility and strategic vision will play a crucial role in tackling the challenges ahead and steering Starbucks towards a successful turnaround.