Inside Starbucks plans to improve stores

Starbucks cafes across the country are starting to change how they make drink orders, among other tweaks designed to reduce bottlenecks and long wait times that have dogged the chain.

The overhaul comes as the coffee giant prepares for an anticipated swell of orders through its mobile app.

At the heart of the plan is Starbucks’ “Siren Craft System,” a series of processes that are 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 drinks. It will be in use across North America by the end of July, according to the company.

Executives hope the changes will provide a much-needed jolt to Starbucks. In April, the company reported a disappointing second quarter, as U.S. same-store sales fell 3% and traffic dropped 7%. The coffee chain cut its 2024 outlook.

Starbucks reported rates of incomplete mobile app orders in the mid-teens and said occasional customers came in less. CEO Laxman Narasimhan mentioned the need to make improvements to stores.

Katie Young, senior vice president of store operations at Starbucks, said the most immediate shift that needed to happen in cafes was better handling the unexpected.

“It’s the ability to flexibly respond to things we cannot predict,” she told CNBC in an interview.

The store changes will be key this month, as Starbucks on Monday started opening up its app to non-rewards members, which the company believes will increase traffic and orders.

Analyst Peter Saleh, managing director at BTIG, said, “My sense is that they have a lot of demand in certain stores, and the footprint of the kitchen is so small, you have to find ways to be more efficient.”

Losing customers because of slow orders and other 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 pulled back on morning or afternoon beverages and snacks. Narasimhan in April said consumers are spending more cautiously.

Starbucks has done something uncharacteristic in recent weeks, joining the stream of value offerings with a $5 food and beverage combo option. Communicating value to customers is also part of the plan to drum up business. 

Starbucks has been diagnosing the bottleneck issue for more than a year, since the company’s reinvention plan rollout in 2022, said Young. At the time, Howard Schultz was at the helm, having returned during a burgeoning unionization movement and shifts in consumer preferences. The changes underway in cafes were first previewed that fall, to be rolled out in the years to come. Narasimhan took over for Schultz in March 2023. 

The Siren system processes were developed with worker feedback on which issues stopped them from creating…