Let’s spend time in a Starbucks!
Let’s spend time in a Starbucks!
Reading between the lines of a new CEO’s note to customers
Wanna meet at Starbucks?
The answer probably depends on where you live and which Starbucks we’re talking about, but I’m willing to bet the answer is no. Once famously (and corporately) dubbed “the third place,” Starbucks seems to have spent the last decade encouraging its customers to hurry up and leave.
Now, the chain’s new CEO — who is Chipotle and Taco Bell’s old CEO — promises, “a welcoming coffeehouse where people gather, and where we serve the finest coffee, handcrafted by our skilled baristas.” The chain has gotten too transactional, Brian Niccol said in an open letter distributed by Starbucks on Tuesday.
Could that mean too much technology? And is a focus on in-store comfort actually anti-tech? Well, no. In the letter, Niccol specifically promises more investments in technology that enhances the customer experience, including its app and mobile ordering platform.
I do, however, enjoy trying to figure out what executives are trying to say without actually saying it. Today, let’s speculate.
Niccol says he’ll empower baristas to take care of customers.
There’s a tech play here for sure. In July, the chain detailed its progress implementing the “Siren Craft System,” a fancy name for an overhaul of machines and in-store processes designed to speed up service. But on the company’s most recent earnings call, chief financial officer Rachel Ruggeri cautioned that the new system is a process, calling it “a major overhaul to our overall stores, our engine.”
“It requires quite a bit of cap ex [that’s “capital expenditure”, or spend] as well as quite a bit of change management,” Ruggeri added.
Niccol says he’ll make the stores inviting again, with thoughtful design and a clear distinction between to-go and in-store service.
This is where he promises better furniture. But there are other highlights, too.
Sometimes, Niccol writes, the wait is too long or the handoff is too hectic. What seems like a popularity problem — too many customers? — could actually be a process problem: too many ways of ordering with an underlying expectation of speed.
This sounds a whole lot like code for “all drive-thru orders must be placed ahead of time.”
During his time at Chipotle, Niccol debuted the ‘Chipotlane,’ a drive-thru pickup service that requires customers to order ahead. Chipotle’s dedication to this order-ahead behavior in line felt remarkable when implemented, and it worked. As of 2022, Chipotlane locations generated 15 percent higher sales than standard restaurants.
Starbucks’ first drive-thru debuted in 1994 (!) but in 2022 — just as Chipotle was basically claiming victory on its car-friendly infrastructure — interim (and legendary) Starbucks CEO Howard Schultz promised drive-thru lanes in 90 percent of the chain’s new locations. “We’ve been unable to meet the relentless demand we’re seeing in our U.S. stores,” he said at the time.
I can not remember a time in the past… five years that Starbucks was not pushing its mobile order and pay service. This convenience juiced Starbucks’ loyalty program — whose members are responsible for 60 percent of Starbucks’ revenue — and ushered in a new and convenient ordering method. But I wouldn’t call searching for your name through a sea of cardboard cups on a counter a particularly hospitable experience.
Niccol did not mention “value” or “discount” or “offers” in his letter.
Any notes on price were conspicuously absent in favor of talking up the Starbucks brand and its history as a once-beloved destination. There are many, many opinions on the internet about what’s wrong with Starbucks right now — it's experiencing a sales slowdown more dramatic than it did during the Great Recession — and price comes up frequently.
In the company’s most recent earnings call, ousted CEO Laxman Narasimhan put brand over price, too. “Given the premiumness of the brand, we've been very careful about the offers,” he said.
Starbucks certainly hasn’t shied away from implementing tech in the past.
Remember the NFT-based loyalty program? The chain shut it down earlier this year, but promised to continue experimenting with new technology. In July, then-CEO Narasimhan announced an expanded relationship with ultrafast delivery provider GoPuff, opening 100 delivery-only locations (yes, ghost kitchens) across the country.
CNN dubbed Niccol ‘fast food’s Mr. Fixit’ for his work reversing fortunes at Taco Bell and Chipotle. New technology, from behind-the-scenes robotics to social media influencer partnerships drove much of that change. But if ever there was a test for the thoughtful use of technology at scale to seriously impact in-person operations at a well-known chain, this will be it. Good luck, Mr. Fixit. See you in the comfy chairs!
upcoming:
I’m excited to join the lineup of this year’s HNGRY Summit in Los Angeles on Oct. 25
I’m hosting a panel called “Painkillers vs. Vitamins in Restaurant Tech” and can promise a thoughtful conversation with industry leaders addressing real issues and identifying opportunities for change. (More soon!)
Early bird pricing ends this weekend.