Internally Starbucks plans to upgrade stores

Starbucks coffee shops across the country have begun changing the way they place drink orders, among other adjustments designed to reduce bottlenecks and long wait times that have plagued the chain.

The overhaul comes as the coffee giant prepares for an anticipated surge in orders through its mobile app.

At the heart of the plan is Starbucks’ Siren Craft System, a series of processes intended to ease the work of baristas 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 drinks. According to the company, it will be rolled out across North America by the end of July.

Executives hope the changes will provide a much-needed jolt to Starbucks. In April, the company reported a disappointing second quarter, as US same-store sales fell 3% and traffic fell 7%. The coffee chain cut its outlook for 2024.

Starbucks reported rates of incomplete mobile app orders among teens and said casual customers were coming in less. CEO Laxman Narasimhan cited the need to make improvements to the stores.

The most immediate change that needed to happen at the coffee shop was better handling the unexpected, Katie Young, SVP of store operations at Starbucks, told CNBC in an interview.

“It’s the ability to respond flexibly to things we can’t predict,” she said.

Store changes will be substantial this month, as Starbucks on Monday began opening up its app to non-rewards members, which the company believes will increase traffic and orders.

“My feeling is that they have a lot of demand in certain stores and the kitchen footprint is so small that you have to find ways to be more efficient,” said BTIG Managing Director Peter Saleh.

Losing customers due to slow orders and other store frustrations could cost Starbucks at a particularly vulnerable time. Americans have become cost-conscious in the face of continued inflation, and in some cases have withdrawn from morning or afternoon drinks and snacks. Narasimhan in April said consumers are spending more carefully.

Starbucks has done something uncharacteristic in recent weeks, joining the stream of value offers with a $5 food and drink combo option. Communicating value to customers is also part of the plan to drive business.

Starbucks has diagnosed the bottleneck problem for more than a year, since unveiling the company’s 2022 reinvention plan, Young said. At the time, Howard Schultz was at the helm, having returned amid a growing union movement and changes in consumer preferences. The changes taking place in the cafe were first predicted that autumn, to be introduced in the following years. Narasimhan took over for Schultz in March 2023.

The Siren Craft System processes were developed with feedback from workers on which issues stopped them from creating drinks and connecting with customers.

Starbucks plans to add an expediter-like role to a restaurant production line, a “game caller” who steps away from production and helps resolve traffic jams in the cafe, handling tasks like refilling cups or helping out when an unexpected crowd arrives. . The company plans to train existing workers for the role or potentially add new baristas, if needed.

“One of the pain points we saw was [that] Our espresso machine was often running around the clock and that was one of the things that prevented our partners from taking control. ” Young said. “We needed to have a partner who was committed when things were busy to step away from production and just help out.”

Starbucks will also change the order in which the drinks are made. Previously, cold drinks were prioritized from start to finish, even if the hot drink order came first, as the withdrawal of espresso coffees was the last step. This could create a traffic jam on the road, for example, if a person ordered one of each drink, as the cold product would be ready while the hot drink was still in production.

Macoy McGlaughlin, location manager of Seattle’s First and Walker Starbucks, said making the drinks in the order they were placed allows for a faster and simpler process.

“We actually have the right sequence between our hot and cold bars, versus the cold bars that are becoming as popular as ever, to really have a consistent customer experience. So we’re actually we do them in the order they come in,” McGlaughlin said, adding that the cafe feels busier, but customers in the store and in the drive-thru are getting drinks faster.

Baristas will also have more control over the company’s Digital Production Manager, an iPad system that controls the sequence of orders across channels from cafes, mobile and drive-thru orders. Workers will have more flexibility to change order priority.

Young said the changes to the app added a sense of urgency to Sirena’s training rollout. She feels confident the stores will be ready if traffic picks up.

Mobile ordering and payment will also be available on third-party platforms to reach more customers.

The potential increase in traffic and workload comes after some bartenders have raised issues about staffing and hours for years, particularly employees who have sought to organize with the United Workers union. In internal surveys and in bargaining committee meetings, union-represented workers consistently rank it as their highest priority issue.

Starbucks says it has made significant progress over the past two years in terms of staffing and scheduling.

BTIG’s Saleh said the company has been uncharacteristically slow.

“The Siren System was first introduced at its 2022 Investor Day with Howard [Schultz] at the top,” Saleh said. “Historically, Starbucks doesn’t do anything slowly. They move quickly, find something they like and get it out quickly.”

Young said Siren Craft’s changes have provided a “material reduction” in things like wait times for orders. Starbucks said that in stores where the company has used the Siren Craft System to optimize operations, it has seen an increase in the number of customers served at peak times that it estimates is worth 1 percentage point of comparable sales annually.

“We feel very confident about the investments we’ve made in our personnel system and all the precision we can bring there,” Young said. “But no system or internal effort could predict that today, a bunch of high school kids decided to get all their friends together and go out at 2 p.m., when we wouldn’t normally see much work.”

Additional store changes will also include a slower rollout of new equipment under the Siren name, with a custom ice dispenser, milk dispensing system and faster blenders to reduce steps for baristas and getting drinks to customers faster. The investment in the equipment will take many years, Young said. She added that updated equipment, along with new in-store training processes, has led to significant returns on investment. Ten percent of stores will have Siren devices by the end of the year.

Young said Starbucks wants customers to feel like wait times are better managed and that “everyone is in a good place even when they’re busy.”