Starbucks Coffee shops across the country are starting to change the way they order drinks, among other tweaks designed to reduce bottlenecks and long wait times that have plagued the chain.
The overhaul comes as the coffee giant prepares for an expected surge in orders 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 customer service times faster. Starbucks said more than 10% of its 10,000 stores have already implemented the system, which involves changing the production order for hot and cold drinks. It will be in use across North America by the end of July, according to the company.
Executives hope the changes will give Starbucks a much-needed jolt. In April, the company reported a disappointing second quarter, as same-store sales in the U.S. fell 3% and traffic fell 7%. The coffee chain lowered its outlook for 2024.
Starbucks reported incomplete mobile app order rates in the mid-teens and reported fewer casual customers. CEO Laxman Narasimhan cited the need to make improvements to the stores.
Katie Young, senior vice president of stores at Starbucks, said the most immediate change that needed to happen at coffee shops was to better handle the unexpected.
“It’s the ability to respond flexibly to things we can’t predict,” she told CNBC in an interview.
Starbucks Coffee shop in Krakow, Poland on February 29, 2024.
Beata Zawrzel | Nurphoto | Getty Images
In-store changes will be key this month, as Starbucks on Monday began opening up its app to non-rewarding members, which the company believes will increase traffic and orders.
Analyst Peter Saleh, CEO of BTIG, said: “My sense is that they are in high demand in some stores and the kitchen footprint is so small, you have to find ways to be more efficient.”
Losing customers due to slow orders and other in-store frustrations could cost Starbucks at a particularly vulnerable time. Americans have become cost conscious in the face of ongoing inflation and in some cases have withdrawn from morning or afternoon drinks and snacks.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 unusual 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 build a business.
The Sirens system
Starbucks has diagnosed the congestion problem for more than a year, since the company’s 2022 reinvention plan was released, Young said. At the time, Howard Schultz was at the helm, having returned during a growing labor movement and changing consumer preferences. The ongoing changes to the cafes were first unveiled in the fall, to be rolled out over the next few years. Narasimhan took over from Schultz in March 2023.
The Siren system processes were developed with employee feedback on which issues prevented them from creating drinks and connecting with customers.
Starbucks said it plans to add a role similar to an expediter on a restaurant production line, a “player caller” who steps away from production and helps solve problems in cafes, handling tasks such as refilling cups or helping when a unexpected crowd. The company plans to train existing employees 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 all the time and that was one of the things that prevented our partners from checking in. ” Said Young. “We really needed to have a partner who was dedicated when things got busy to step away from 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, even if a hot drink order came first, as pulling shots of espresso was the last step. This could create a traffic jam, for example, if one person ordered one of each drink, as the cold product would be ready while the hot drink was still in production.
Macoy McLaughlin, manager of the First and Walker Starbucks location in Seattle, said producing drinks in the order they were placed allows for a faster, more streamlined process.
“We actually have proper sequencing between our hot and cold bars, unlike the cold bars that are becoming as popular as ever, to really have a consistent experience for customers. So we actually make them in the order they come, ” McLaughlin said, adding that the coffee shop feels busier, but customers in the store and in the drive-thru drink faster.
Baristas will also have more control over the company’s digital production manager, an iPad system that controls the sequencing of orders across various channels from coffee shops, mobile ordering and the drive-thru, the company said. Workers will have more flexibility to change order priority.
The Starbucks app is expanding
Young said the app changes added a sense of urgency to the Siren 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 as some baristas for years have raised issues about staffing and scheduling, particularly workers who have tried to organize with the Workers United union. In internal investigations and in bargaining committee meetings, union-represented workers consistently rank it as their top priority.
Starbucks says it has made significant progress over the past two years in terms of staffing and programming.
BTIG’s Saleh said the company moved uncharacteristically slowly.
“The Siren System was first introduced at its 2022 investor day with Howard [Schultz] at the wheel,” Saleh said. “Historically, Starbucks doesn’t do anything late. They move quickly, find something they like and get it out quickly.”
Young said the changes to the Siren system have provided a “material reduction” in wait 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 during peak hours that it estimates is worth 1 percentage point of comparable sales annually.
“We feel very confident about the investments we’ve made in our staffing system and all the precision we can bring there,” Young said. “But no system or internal efforts can predict that today, a group of high school kids decided to gather all their friends and go out at 2 o’clock in the afternoon when we wouldn’t normally see a lot of business.”
The company said there will be a slower rollout of new equipment under the same Siren name, with a custom ice dispenser, milk dispensing system and faster blenders to reduce steps for baristas and deliver drinks to customers faster. The investment in equipment will take many years, Young said. He said the updated equipment, combined with new in-store training processes, has led to significant returns on investment and 10% of stores will have Siren equipment by the end of the year.
Young said Starbucks wants customers to feel like wait times are better managed and that “everybody’s in a good place even when they’re busy.”
Correction: This story has been updated to correct the spelling of Macoy McLaughlin’s name.
