Starbucks Coffeeshop in Krakow, Poland on February 29, 2024.
Beata Zawrzel | Nurfoto | Getty Images
Starbucks Cafes across the country are starting to change the way they process drink orders, and are making adjustments to help ease the bottlenecks and long wait times that plague the chain.
The refresh comes as the coffee giant prepares for an expected increase in orders via its mobile app.
At the heart of the plan is Starbucks’ “Siren Craft System,” a set of processes aimed at making baristas’ jobs easier and speeding up service times for customers. Starbucks said more than 10% of its 10,000 stores have already implemented the system, which includes changing the production order for hot and cold beverages. The company said the device will be rolled out across North America by the end of July.
Executives hope the changes will give Starbucks a much-needed jolt. In April, the company reported a disappointing second quarter, with U.S. same-store sales down 3% and traffic down 7%. The coffee chain lowered its outlook for 2024.
Starbucks reported incomplete orders from mobile apps in the mid-teens and said casual customers were coming in less. CEO Laxman Narasimhan mentioned the need to make improvements in the stores.
The most immediate change that needed to happen in cafes was better handling the unexpected, Katie Young, Starbucks SVP of store operations, told CNBC in an interview.
“It's the ability to respond flexibly to things we can't predict,” she said.
The store changes will be crucial this month, as Starbucks on Monday began opening up its app to non-rewards members, which the company says will increase traffic and orders.
“I feel like there's a lot of demand in certain stores and the kitchen footprint is so small, you have to find ways to work more efficiently,” said Peter Saleh, BTIG's general manager.
Losing customers due to slow orders and other frustrations at its stores could cost Starbucks money at a particularly vulnerable time. Americans have become cost-conscious in the face of persistent inflation, and in some cases have retreated from their morning or afternoon drinks and snacks. Narasimhan said in April that consumers will spend more cautiously.
Starbucks has done something unusual in recent weeks by joining the flood of value offerings with a $5 food and beverage combo option. Communicating value to customers is also part of the plan for doing business.
The Siren Craft System
Starbucks has been investigating the bottleneck for more than a year, since rolling out the company's 2022 reinvention plan, Young said. At the time, Howard Schultz was at the helm, having returned amid a burgeoning union movement and shifts in consumer preferences. The changes underway in cafes were first showcased that autumn and will be rolled out over the coming years. Narasimhan took over from Schultz in March 2023.
The Siren Craft System processes were developed based on employee feedback about the issues that prevented them from making drinks and connecting with customers.
Starbucks plans to add a role similar to an expediter on a restaurant production line, a “play caller” who will step back from production and help resolve cafe congestion, by performing tasks such as refilling cups or helping when an unexpected crowd arrives. The company plans to train existing employees for the role or potentially add new baristas as needed.
One of the pain points we saw was [that] our espresso machine was often on all the time, and that was one of the things that kept our partners from checking in. And another thing we saw that you didn't necessarily know was which part of the store was going to be busy. Young said. “We really needed a partner who was committed when things got busy to stop production and just help out.”
Starbucks will also change the order in which drinks are made. Previously, cold drinks were prioritized from start to finish, even if a hot drink order came in first, because making espresso shots was the last step. For example, this could cause a traffic jam in the drive-thru if someone ordered one of each drink, because the cold item would be ready while the hot drink was still in production.
Macoy McGlaughlin, manager of First and Walker Starbucks in Seattle, says the process is faster and more streamlined when drinks are produced in the order they are placed.
“We actually have a good sequencing between our hot and cold bars, rather than cold bars becoming more popular than ever, to really provide a consistent experience for the customers. So we actually make them in the order that they come in,” McGlaughlin said, adding that the cafe feels busier, but customers in the store and in the drive-thru get drinks faster.
Baristas will also have more control over the company’s Digital Production Manager, an iPad-based system that controls the order sequence across channels, from cafes, mobile ordering and the drive-thru. Workers will have more flexibility in changing order priority.
Starbucks app expands
Young said the app changes added a sense of urgency to the rollout of the Siren training. She is confident the stores will be ready when traffic increases.
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 have struggled with staffing and scheduling for years, particularly workers who have tried to organize with the Workers United union. In internal surveys and at bargaining committee meetings, union-represented workers consistently rank it as their top priority issue.
Starbucks says it has made significant progress in staffing and scheduling over the past two years.
BTIG's Saleh said the company has been unusually slow.
“The Siren System was first introduced at the 2022 Investor Day with Howard [Schultz] at the helm,” Saleh said. “Historically, Starbucks doesn't do anything slowly. They move quickly, find something they like and roll it out quickly.”
Young said the changes to Siren Craft have resulted in 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, worth an estimated 1 percentage point of comparable sales per year.
“We're very confident in the investments we've made in our staffing system and all the precision we can bring to it,” Young said. “But no system or internal effort can predict that today a group of high school students decided to gather all their friends and show up at 2 p.m., when normally we wouldn't see much business.”
Additional store changes will also see a slower rollout of new equipment under the same Siren name, with a modified ice dispenser, milk dispensing system and faster blenders to reduce the number of steps for baristas and get drinks to customers faster. The investment in equipment will take several years, Young said. She added that the updated equipment, combined with the new training processes in store, has resulted in a significant return on investment. Ten percent of stores will have the Siren equipment by the end of this year.
Young said Starbucks wants customers to feel like wait times are better managed and that “everyone is in a happy place, even when it's busy.”
