Starbucks’ New CEO Faces a Mobile Order Mountain
The familiar sight of crowded Starbucks counters, filled with customers waiting for their mobile-ordered drinks, has become a source of frustration for both patrons and baristas alike. As Starbucks faces a period of declining sales and brand woes, incoming CEO Brian Niccol will need to tackle this growing problem head-on to turn the coffee giant around. Operational issues, including the overwhelming influx of mobile orders, have been cited as a key factor in Starbucks’ recent struggles, with former CEO Howard Schultz famously calling the mobile app "the biggest Achilles heel for Starbucks."
Key Takeaways:
- Mobile orders account for a significant portion of Starbucks’ sales (roughly one-third) and are often more complicated than in-store orders, leading to longer wait times and frustrated customers.
- Starbucks has struggled to keep up with the growth of mobile ordering, failing to adequately adjust its operations to accommodate this shift in consumer behavior.
- Niccol’s experience at Chipotle, where digital sales are a major component of the business, could provide valuable insights for improving Starbucks’ mobile ordering experience.
- Starbucks has already begun implementing measures to address mobile order bottlenecks, including the roll-out of new equipment and updates to its mobile app. However, more drastic changes may be needed to fully address the issue.
Catching Up to Mobile Growth
The problem of mobile order overload has become increasingly evident in recent years, with Starbucks struggling to meet demand during peak hours. Former CEO Howard Schultz described the situation as a "mosh pit" during his own visit to a Starbucks location. While mobile ordering offers convenience for customers, it has also contributed to a decline in the “third place” experience that Starbucks used to be known for. Customers are increasingly opting for quick grab-and-go orders, a trend Starbucks has not fully adapted to.
Schultz acknowledged the company’s failure to anticipate the technological needs that emerged with the rise of mobile ordering, leading to operational bottlenecks that overwhelmed baristas. This has also contributed to the growing pressure on baristas, who have faced excessive workloads and burnout. In response, many Starbucks workers have unionized, demanding better working conditions and increased support to handle the surge in mobile orders.
Channeling Chipotle’s Strength
Niccol arrives at Starbucks with experience in managing a company heavily reliant on digital sales. At Chipotle, 35% of revenue comes from online orders, a significant increase from just 18% in 2019. This shift was fueled by the pandemic and has been reinforced by strategies implemented by Niccol, including dedicated digital order prep lines, “Chipotlanes” for drive-thru pickup, and targeted promotions for online orders, including the digital-only launch of quesadillas. Additionally, Chipotle has been testing automation for mobile-ordered burrito bowls, demonstrating a commitment to optimizing its digital experience.
Mobile Makeover
Starbucks is not without solutions to tackle its mobile woes. Its reinvention plan, launched in 2022, aimed to streamline operations by introducing new equipment and processes to speed up service. These include the roll-out of the "Siren Craft System" across North America and the mobile app update that displays order progress, giving customers a better sense of wait times. Furthermore, Starbucks is committed to improving barista experience through better equipment and training.
However, the speed and scale of these changes remain a significant challenge. The company is still facing a backlog of equipment installations, which will be critical to significantly reducing service times.
Niccol’s experience with Chipotle’s successful digital strategies could offer valuable insights for Starbucks to optimize its mobile ordering experience. Whether he can succeed in turning around Starbucks’ mobile order mountain remains to be seen, but his experience in digital innovation suggests potential for a more efficient and customer-friendly mobile ordering system.
