Starbucks is going through a painful reinvention, one that is both playing out in public and only partially of its own making. In a recent letter, Interim CEO Howard Schultz noted we’re living in a “changing world” with pressures coming from all angles.
He’s not wrong, the pressures are immense. Restaurants face rising costs and social changes that affect customers, employees, and partners. Starbucks has exacerbated these pressures through missteps in its digital transformation which transformed the “Third Place” in a negative way for its baristas. Now, Starbucks is undergoing a major process of reinvention. The question that we’re going to see answered over the next few months and years is: what and how long will it take to regain its brand promise?
Every brand needs to look at the lessons that Starbucks has learned along this journey and avoid the same mistakes. Yes, the move to digital meant that Starbucks became a money-making machine, but that came at the cost of its brand.
A rash of very public employee complaints as well as active efforts to unionize stores demonstrate that all is not right. The fact is that the consumer’s experience is delivered by the frontline team members and that customer experience depends on how much those employees like their jobs. In the letter entitled, “The next chapter of Starbucks Reinvention,” Schultz lays out a future that focuses on some key issues, like improving both the safety of Starbucks employees and their quality of life, as well as “reimagining” the in-store experience. He also talks openly of “delivering memorable and personalized moments” and “partnering” with the whole Starbucks community.
From this experience, brands can take away three key lessons:
The digital experience should enhance the human-to-human interactions, not replace them
The “third place” that Schultz described is a physical space where people spend time, communicate, work, relax, and live. Even before the pandemic, Starbucks had started to lose its physical luster. As the app grew, people began to treat Starbucks to just dash in and grab what they needed on the way to somewhere else.
Panera is a great example of a brand that uses digital to extend the brand without hurting it. The fast casual promises fresh ingredients and good quality food. Its digital environment simply augmented that by providing users with more choice. The ingredients are all there, and so is the freshness, but now users can customize foods and still get what Panera has always promised.
Pick-up is now the primary brand experience for a large number of your clients, treat it that way
Let’s face it, finding your name among the clutter cups on a Starbucks takeout table is not fun. Alternatively, we can order ahead and then wait in line at the drive-thru. This is how must guests now experience Starbucks.
Industry wide, more than a third of all orders come in digitally, and a growing number of those are pickup. Brands must think through how they want their guests to interact, whether that’s through a well-organized shelf with speed and efficiency as the key takeaway, or whether it’s a personal interaction with an individual giving the purchase one final check before handing it over.
Employees are your experience, their comfort is essential
Like Panera, Starbucks also created a customized experience within the app, but they didn’t bring the baristas along for the ride. Being a Starbucks barista used to be one of the coolest jobs in quick service. They were well-trained on complex machines, talked to guests, and handmade drinks. Now, instead of a drink personalized for an individual with whom they have a relationship, even if just for a moment, the barista receives a set of instructions for an ever-faceless recipient. This led to worker frustration in which they complained of understaffing, erratic hours, and a job that has become something akin to working on an assembly line.
But that’s not all, the employees now worry for their own safety, which is the reason Schultz gave for closing 16 units. If employees don’t feel safe and comfortable coming to work, then they can’t be their best for the guests.
In a recent conversation I had with CEOs of fast casual and quick-service brands, the executives made it clear that employees are essential to customer experience. One went so far as to say that employee experience will always be better than the customer experience. That idea infuses everything they do, from rolling out technologies like robotics, to how they communicate with their teams. These CEOs want the humans involved, they want the expertise that develops over time, and they want those employees to be central to guest experience. The goal of technology shouldn’t be to remove people from the process, but make employees better and their jobs, and ultimately, make for a better guest experience.
What comes next for Starbucks will depend on a number of factors, including the next CEO, the changes in the market, and the results of the growing unionization efforts. We know we’ll see more store closures, as Schultz has said as much in interviews. There will also be several changes to how the stores operate, and how they can enhance and elevate the roles of their staff. Where those will come and how they’ll impact the brand remains to be seen. We also know that the Starbucks app isn’t going anywhere, the question will be how it’s used to reach the stated goal of blending with the in-store experience to deliver the “memorable and personalized moments” that originally made Starbucks a brand to watch.
Andrew Robbins is the CEO of Paytronix Systems, Inc., helping brands deliver exceptional guest experiences through digital interactions—online ordering, loyalty, gift, mobile payment, apps, messaging, and more. A product visionary with an acute business acumen, Andrew’s applies data-driven artificial intelligence to motivate increased visits and spending throughout the customer journey for 1,800 brands across 34,000 locations. He has earned engineering degrees and a graduate business degree from some of the nation’s most prestigious universities—Princeton, MIT, and Harvard.
