Starbucks is facing a major operational challenge when it comes to mobile orders, with frustrated customers, overwhelmed baristas, and crowded counters becoming a common sight in their cafes. Former CEO Howard Schultz highlighted the mobile app as the biggest Achilles heel for the coffee giant, with mobile orders accounting for roughly one-third of the total sales. While add-ons like cold foam or syrups are profitable, they also tend to be more time-consuming for baristas. Robert Byrne, a senior director of consumer research, emphasized that the issue lies in the store rather than in the data.
Starbucks, once positioned as a “third place” between work and home by Schultz, has lost its reputation as more customers opt for the convenience of mobile ordering. Despite the exponential growth in digital sales, the company failed to make significant adjustments to its operations to anticipate this shift in consumer behavior. Schultz criticized the company for not investing ahead of the curve and failing to pay attention to the velocity of the mobile app until it was too late.
Baristas Facing Burnout
The pressure created by mobile order issues has added to the burnout experienced by Starbucks baristas. Employees’ frustration with the app led to unionization, with Starbucks Workers United pressing the company to turn off mobile ordering during promotions. Digital sales have not been as challenging for Niccol’s current employer Chipotle, as online orders accounted for 35% of the company’s revenue in the latest quarter.
Starbucks has taken steps to speed up service and enhance the work experience for baristas. Narasimhan’s strategy has largely focused on tackling bottlenecks through new equipment and measures to hasten service. Despite these efforts, the equipment rollout has been slow, with only 40% of North American locations expected to have the new machines by the end of fiscal 2026.
As incoming CEO, Brian Niccol faces the daunting task of turning around the struggling coffee giant. Investors and executives believe that operational issues are one of the primary reasons for the chain’s lagging sales performance. Niccol’s background in revolutionizing digital sales at Chipotle positions him as a credible figure to address the challenges faced by Starbucks. His experience in boosting digital sales through promotions and operational improvements will be crucial in leading Starbucks towards a more efficient and profitable future.
Starbucks is at a crossroads when it comes to operational efficiency, particularly in dealing with the challenges posed by mobile orders. The company’s reputation and sales have taken a hit due to its inability to adapt to shifting consumer behaviors and the rapid growth of digital sales. With Brian Niccol set to take the helm, there is hope for a revitalization of Starbucks’ operational strategies to improve service and enhance the overall customer experience. It will be interesting to see how Niccol navigates these challenges and leads Starbucks into a new era of success.
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