Starbucks—in the throes of a major turnaround plan—brought on outside tech assistance to aid its comeback.
The company licensed software from Empower Delivery, a company that helps operators obtain more control over their delivery options. Starbucks also hired the firm’s six engineers. Meredith Sandland, who served as Empower Delivery CEO for nearly three years, was announced earlier this year as Starbucks’ new chief coffeehouse design and development officer.
The Empower Delivery team will help the coffee giant achieve its four-minute wait time goal and modernize technology in stores.
“Empower Delivery software is, at its core, a timing and coordination engine that gets the right product to the right person at the right time,” Sandland said in a LinkedIn post. “Starbucks was among the very first restaurant brands to have an app. The app’s incredible success has also made Starbucks among the very first restaurant brands to feel the operational impacts of digital sales. The Empower Delivery team’s efforts will be focused on streamlining the Starbucks omnichannel operations, contributing to improving order to handoff speed in the café and drive-thru, while ensuring app customers get their orders on time.”
The brand’s “Back to Starbucks” plan was formulated by Brian Niccol, who became CEO in September. The strategy is focused on reintroducing Starbucks to the world, delivering the customer experience to win the morning and peak periods, reestablishing Starbucks as the community coffeehouse, and ensuring Starbucks is a competitive employer.
On January 27, Starbucks shops nationwide began serving beverages in ceramic mugs for guests who choose to sit inside and offering those same customers a free refill of hot and iced brewed coffee and tea. In addition to those amenities, the chain brought back the condiment bar and started writing messages on cups with Sharpie markers like it once did.
Consumers have responded positively. Over the past three weeks, the number of customers who choose ceramic mugs and glassware to sit and stay in cafes has increased by more than 3X on average in the U.S. The company also changed its code of conduct policy so that guests must place an order to stay in the dining room or use the bathroom.
Starbucks released an advertisement called “Stay Awhile” on March 17 that highlights the new benefit of free refills and dining inside.
Additionally, Starbucks will cut its menu by 30 percent, add 3,000 labor hours, pilot a more efficient staffing model, and bring structure to the mobile ordering process. The brand wants its employees to be happy while serving guests as well. The chain doubled paid parental leave for eligible U.S. workers and committed to promote from within for 90 percent of retail leadership roles in the next three years.
In the longer term, Starbucks is testing store redesigns—including more comfortable seating and spaces—to create a better environment for guests who want to sit, work, and meet. The brand is also considering more power outlets to encourage longer stays, dedicated areas for mobile pickup and new risers and pickup shelves for better distinction between in-store and mobile customers, abundant food displays to entice guests to try new items, and a redesigned espresso bar to add a sense of theater to the ordering experience.
The strategy has come with growing pains. In late February, Starbucks announced it would lay off 1,100 corporate employees and remove several hundred unfilled corporate positions to create more versatile and adaptable decision-making.
Starbucks’ U.S. quick-service share recovered in Q1 following two quarters of declines. And it did so despite reducing the frequency of discount-driven offers—there were 40 percent fewer such transactions in the period, year-over-year. Through the quarter, the brand saw a shift in sales mix toward coffee and espresso-based beverages, which over-delivered and compensated for lower-than-expected performance across holiday promotions.
Same-store sales declined 4 percent (8 percent drop in traffic and 4 percent rise in ticket) in the North America and U.S., yet improved over the course of three months, and non-Starbucks Rewards traffic grew, quarter-over-quarter. Members and spend lifted versus Q4 and year-over-year, and price parity for non-dairy milk customizations brought back lapsed Rewards users.
