Starbucks is floundering. AI is the solution.
Starbucks can right the ship by improving its store experience for in-store customers and using automation to streamline drive-thru and mobile app orders
Starbucks is floundering, and the company is desperately seeking solutions to get itself back on track. Unfortunately, it’s reaching for the wrong ones.
The company recently announced it’s implementing something called the “Siren Craft System,” which streamlines “how orders are processed and made,” according to CNBC.
That’s fine, I guess. But it won’t help much. Starbucks is ignoring the solution that would be most effective at righting the ship: Automation.
To some, automation is a scary word. They hear it and imagine workers getting handed pink slips. But one of Starbucks’ major issues is difficulty attracting enough employees; they wouldn’t have to fire anyone if they partially automated their stores. Automation could help make the job less stressful for existing baristas, while keeping labor costs at bay.
It’s tempting to reach for familiar solutions. In a LinkedIn post penned in May, former Starbucks CEO Howard Schulz identified what he saw as the priorities the company needed to focus on to get back on track:
The stores require a maniacal focus on the customer experience, through the eyes of a merchant. The answer does not lie in data, but in the stores. …
One of their first actions should be to reinvent the mobile ordering and payment platform—which Starbucks pioneered—to once again make it the uplifting experience it was designed to be. The go-to-market strategy needs to be overhauled and elevated with coffee-forward innovation that inspires partners, and creates differentiation in the marketplace, reinforcing the company’s premium position. Through it all, focus on being experiential, not transactional.
Reinvent the mobile ordering experience — whatever that means — and be “coffee-forward” to inspire partners and “create differentiation in the marketplace. Schulz isn’t exactly wrong (although he’s rather vague), but he misses the key factor that has customers turning their back on Starbucks: Prices.
The BBC profiled one Starbucks customer who had had enough with the coffee company’s constant price increases:
Andrew Buckley, a self-described "mocha guy", recently swore off his Starbucks habit, reeling after the firm's latest price increase sent the cost of his drink above $6.
The 50-year-old, who works in tech sales in Idaho, had been a loyal customer for decades, treasuring his near-daily venti mocha as a little luxury that allowed him to stretch his legs during the work day.
But the company's latest price increase crossed a line.
"It was the straw that broke the camel's back on my feelings of inflation in general. It's like, 'That's it. I can't do it anymore,'" says Mr Buckley, who rang up customer service with complaints before heading to social media to vent.
"I just lost it," he said. "I don't plan to be back either."
He’s not alone. Starbucks needs to be honest with itself: Its real problem is not high wait times, poor customer service, or whatever other scapegoat may come to mind. Sure, those issues are real and have some impact on Starbucks’ flagging sales. But the primary reason people aren’t buying Starbucks as much anymore is because it’s gotten expensive, and with other goods and services also getting costlier, expensive take-out coffee is an easy thing to cut. Shortening wait times or improving the store experience has zero effect on customers’ wallets, which is what they’re most concerned about.
In a world of rising inflation, automation can increase productivity, allowing Starbucks to pass savings along to consumers. One of the reasons Starbucks has gotten so expensive is because of increased labor costs. (As an aside, it’s absurd that some Starbucks workers are trying to unionize when the company offers industry-high wages and excellent benefits such as health insurance and free college tuition). With a nationwide labor shortage, Starbucks has to pay more to attract workers, and even then it’s a losing battle with stores consistently suffering from understaffing.
Automation can help fill that gap, and there’s a smart way to go about it. People walking through Starbucks’ doors to sit and sip want that warm, friendly atmosphere the company is known for. They want to be handed their drink with a smile from a friendly barista.
But people ordering on the app or cruising through the drive-thru are far more concerned about getting in and out quickly. Those are the people who would be better served by automation. Let flesh-and-blood baristas serve the customers who come inside and expect friendly service.
Let robots serve everyone else.