Starbucks Coffee shops across the country have begun changing the way they serve drinks, among other adjustments aimed at reducing the bottlenecks and long wait times that the chain has suffered.
The changes come as the coffee giant prepares for an expected wave of orders via its mobile app.
The plan is Starbucks’ SirenCraft system, a series of processes aimed at making it easier for coffee shop workers to do their jobs and speed up service times for customers. Starbucks said more than 10% of its 10,000 stores have already implemented the system, which involves changing the order of production for hot and cold beverages. It will be rolled out across North America by the end of July, the company said.
Executives hope the changes will provide a boost for Starbucks. In April, the company reported disappointing second-quarter results, with same-store sales in the U.S. down 3% and traffic down 7%. The coffee chain has cut its outlook for 2024.
Starbucks reported that its mobile app order incomplete rate was in the mid-20s, and said fewer occasional customers were coming in. Chief Executive Lakshman Narasimhan cited the need for store improvements.
The most urgent shift that needs to happen in coffee shops is to better handle the unexpected, said Katie Young, Starbucks' senior vice president of store operations.
“It's the ability to respond flexibly to things we can't predict,” she said in an interview with CNBC.
A Starbucks coffee shop in Krakow, Poland, February 29, 2024.
Beata Sauerzel | Noor Photo | Getty Images
The changes in the store will be key this month, as Starbucks on Monday began opening its app to non-rewards members, which the company believes will increase traffic and orders.
“I feel they have a lot of demand in certain stores, and the kitchen space is very small, so you have to find ways to be more efficient,” said analyst Peter Saleh, managing director at BTIG.
Losing customers to slow orders and other store frustrations could cost Starbucks dearly at a particularly sensitive time. Americans have become more cost-conscious in the face of persistent inflation, in some cases cutting back on morning or afternoon drinks and snacks. Consumers are spending more cautiously, Narasimhan said in April.
Starbucks has done something unusual in recent weeks, joining the value-packed offerings with a $5 food and drink combo option. Delivering value to customers is also part of the plan to drive business.
siren system
Starbucks has been diagnosing the bottleneck for more than a year, Young said, since rolling out a plan to reinvent the company in 2022. At the time, Howard Schultz was at the helm, returning amid a burgeoning union movement and shifting consumer preferences. The changes underway at the coffee shops were first previewed that fall, with rollouts set to roll out in the coming years. Narasimhan took over for Schultz in March 2023.
Siren's system processes were developed based on employee feedback about issues that prevented them from creating drinks and connecting with customers.
Starbucks said it plans to add a metronome-like role to its restaurant production line, a “stage caller” who would step away from production and help resolve bottlenecks in cafes, taking on tasks like restocking cups or helping when an unexpected crowd arrives. The company plans to train existing workers for the role or possibly add new bartenders, if needed.
“One of the weaknesses we noticed was that our espresso machine was running all the time, and that was one of the things that prevented our partners from logging in. Another thing we noticed that you didn’t have to know was which part of the store would be the busiest,” Young said. “We needed a dedicated partner when things got busy to step away from production and just help.”
Starbucks said it would also change the order in which drinks were prepared. Previously, cold drinks were given priority from start to finish, even if a hot drink order came first, with espresso shots being the last step. This could create a traffic jam in the drive-thru, for example, if someone ordered one of each drink, as the cold drink would be ready while the hot drink was still in production.
Producing drinks in the order they are served allows for a faster, more streamlined process, said McCoy McLaughlin, manager of the two First Walker Starbucks locations in Seattle.
“We actually have a proper sequencing between our hot and cold bars, rather than cold bars becoming more common, to really have a consistent experience for the customer. So we actually do them in the order they come in,” McLaughlin said, adding that the cafe seems busier, but customers in the store and in the drive-thru are getting drinks faster.
Cafe workers will also have more control over the company’s digital production manager, an iPad system that controls the ordering process across different channels from cafes, mobile ordering and drive-thru, the company said. Workers will have more flexibility to change the priority of orders.
Starbucks app expands
Young said the changes to the app have added a sense of urgency to Siren’s training process. She feels confident that stores will be prepared if customer traffic increases.
Mobile ordering and payment service will also be available on third-party platforms to reach more customers.
The potential increase in traffic and workloads comes at a time when some coffee shop workers have for years raised issues related to staffing and scheduling, particularly employees who have sought to organize with the United Workers Union. In internal surveys and at bargaining committee meetings, workers represented by the union have consistently ranked this issue as their top priority.
Starbucks says it has made significant progress over the past two years in hiring and scheduling.
Saleh of PTIG said the company was moving unusually slowly.
“The Siren system was first introduced at the Investor Day in 2022 with Howard (Schultz) at the helm,” Saleh said. “Historically, Starbucks doesn’t do anything slowly. They move fast, find something they love and roll it out quickly.”
Young said the changes to the Siren system have resulted in a “significant reduction” in wait times for orders. Starbucks said that in stores where the company has used the Siren system to improve operations, it has seen an increase in the number of customers served at peak times, which the company estimates is equal to one percentage point of comparable sales annually.
“We feel very confident in the investments we’ve made in our recruiting system and all the rigor we can provide there,” Young said. “But no system or internal effort could have predicted that a group of high school students would decide today to gather all their friends and show up at 2 p.m., when we don’t normally see a lot of work.”
The company said there will be a slower rollout of the new equipment under the same Siren name, with a dedicated ice dispenser, milk dispensing system and faster mixers to reduce the steps baristas have to take and deliver drinks to customers faster. Young said the investment in the equipment will take several years. She said the updated equipment, along with new in-store training, has led to a significant return on investment, with 10% of stores expected to have Siren equipment by the end of the year.
Starbucks wants customers to feel that wait times are better managed and that “everyone is in a good place even when it's crowded,” Young said.
Correction: This story has been updated to correct the spelling of McCoy McLaughlin's name.
