Starbucks Cafes around the country began to change how they make drink orders, among other tweaks designed to reduce bottlenecks and long wait times that have dogged the chain.
The comeback comes as the coffee giant prepares for the much-anticipated order through its mobile app.
At the heart of the plan is Starbucks’ “Siren Craft System,” a series of processes aimed at making baristas’ jobs easier and shortening service times for customers. Starbucks says more than 10% of its 10,000 stores have implemented the system, which includes changing the production order for hot and cold drinks. It will be available in North America by the end of July, according to the company.
Executives hope the change will give Starbucks the jolt it needs. In April, the company reported a disappointing second quarter, as US same-store sales fell 3% and traffic fell 7%. Coffee chain cuts 2024 outlook.
Starbucks reported that the mobile app order rate is in the mid-teens and said that sometimes customers come in less. CEO Laxman Narasimhan cited the need to make improvements to the store.
Katie Young, senior vice president of store operations at Starbucks, said the most immediate shift that needs to happen in the cafe is to handle the unexpected.
“It’s the ability to respond flexibly to unpredictable things,” he told CNBC in an interview.
A Starbucks coffee shop in Krakow, Poland on February 29, 2024.
Beata Zawrzel Nurphoto Getty Images
Store changes will be key this month, as Starbucks begins opening up its app to non-rewards members, which the company believes will increase traffic and orders.
Analyst Peter Saleh, managing director at BTIG, said, “My understanding is that they have a lot of demand in certain stores, and the former kitchen is small, you have to find a way to be more efficient.”
Losing customers due to slow orders and frustrating other stores could cost Starbucks at a vulnerable time. Americans have become cost-conscious in the face of persistent inflation, and in some cases have backed off on morning or evening drinks and snacks. Narasimhan in April said consumers are spending more carefully.
Starbucks has done something uncharacteristic in the past few weeks, joining the value offering stream with $5 food and beverage combo options. Communicating value to customers is also part of the plan to drum up business.
Siren System
Starbucks has been diagnosing the bottleneck problem for more than a year, since the company’s reinvention plan was launched in 2022, Young said. At that time, Howard Schultz was at the helm, having returned during the burgeoning unionization movement and changes in consumer preferences. The changes made to the cafe were first previewed that fall, to be rolled out in the following years. Narasimhan took over from Schultz in March 2023.
The Siren system process was developed with worker feedback on issues that stopped brewing and connecting with customers.
Starbucks said it plans to add a role similar to that of an expedition in the restaurant’s production line, a “play caller” who stops production and helps solve logjams in the cafe, handling tasks such as setting aside cups or helping when someone is unexpected. The company plans to train existing workers for the role or potentially add new baristas, if needed.
“One of the pain points we see is (that) our espresso machines are running often, and that’s one of the things that prevents our partners from checking in. They have to know which parts of the store are going to be busy,” Young said. “We need to have a dedicated partner when something is busy to pull out of production and just help out.”
Starbucks said it will also change the order in which the drinks are made. Previously, cold drinks were prioritized from start to finish, although orders for hot drinks came first, as pulling an espresso was the last step. This can create traffic jams in the drive-thru, for example, if people order one of each drink, as the cold item will be ready while the hot drink is still in production.
Macoy McLaughlin, manager of Seattle’s First and Walker Starbucks locations, said producing drinks in the order they were placed allows for a faster, streamlined process.
“We actually have the right order between our hot and cold bars, versus the cold bar is as popular as ever, really have a consistent experience for customers. So we actually make them in the order they come in,” McLaughlin said, adding that the cafe feels busy, but customers at the store and drive-thru get their drinks faster.
Baristas will also have more control from the company’s digital production manager, an iPad system that controls the sequence of orders in various channels from the cafe, mobile ordering and drive-thru, the company said. Workers will have more flexibility than changing order priorities.
The Starbucks app is expanding
Young said the app changes add a sense of urgency to the Siren training rollout. He feels the store is confident it will be ready when traffic picks up.
Mobile ordering and payments will also be available on third-party platforms to reach more customers.
The potential increase in traffic and workload is because some baristas have been raising issues about staffing and scheduling for years, especially employees who have been trying to organize with the union. In internal surveys and at bargaining committee meetings, union-represented workers consistently rank it as the highest priority issue.
Starbucks says it has made significant progress over the past two years in staffing and scheduling.
BTIG’s Saleh said the company has moved uncharacteristically slowly.
“The Siren system was first introduced at the investor day in 2022 with Howard (Schultz) at the helm,” said Saleh. “Historically, Starbucks doesn’t do things slowly. They move fast, find something they like and play fast.”
Young said the changes to the Siren system have provided a “material reduction” in waiting times for orders. Starbucks said that in stores where the company has used the Siren system to optimize operations, it has seen an increase in the number of customers served at peak times that is approximately worth 1 percentage point of comparable sales every year.
“We’re very confident in the investment we’ve made in our staffing system and all the precision we’ve been able to achieve,” Young said. “But no system or internal effort could have predicted that today, a group of high school kids decided to gather all their friends and come in at 2 p.m., when they normally wouldn’t see much business.”
The company said there will be a slower rollout of new equipment under the same Siren moniker, with custom ice dispensers, milk-dispensing systems and faster blenders to reduce steps for baristas and get drinks for customers faster. The equipment investment will take several years, Young said. He says the updated equipment, coupled with new in-store training processes, has made the investment worthwhile, and 10% of stores will have Siren equipment by the end of the year.
Young said Starbucks wants customers to feel like waiting for a better time to manage and that “everyone is just in a good place even if it is busy.”
Correction: This story has been updated to correct the spelling of Macoy McLaughlin’s name.
