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Inside Starbucks’ Service Acceleration Plan

Starbucks is rolling out a sweeping plan to drive growth over the next three years — from faster Frappuccinos to more digital rewards.

Turn on the faucet: New equipment makes it easier for bartenders to prepare complex drinks in seconds. Thousands of new US stores. A more reliable mobile app with new rewards. And enough new perks and benefits to prevent employees from joining a union.

The news came Tuesday during the company’s investor day, as Starbucks leaders spent hours mapping out what would happen over the next few years.

Interim CEO Howard Schultz said Tuesday. “We’re just reinventing the way we do it.” Schultz will keep his position until new CEO Laxman Narasimhan takes over in April.

Schultz introduced a master version of the new plan in July through an open letter to employees, saying that “Starbucks’ business as it is today was built not to be fully responsive. our evolving behaviors, needs and expectations [employees] or customers. It is not designed for the future we want for ourselves and the communities we serve. “

Frappuccinos are faster

Starbucks must catch up with its customers to accelerate growth. Over the years, “the business has changed dramatically,” says Schultz.

Customers are ordering more and more through the company’s mobile app and drive-thrus. They are opting for cold drinks, which currently make up the majority of drink orders. Sometimes they also order TikTok-inspired concoctions, so much so that they create a large iced vanilla latte that seems like a simple black coffee.

These new consumption habits create complexity for employees tasked with preparing time-consuming recipes that are ordered in person, through an app, or at drive-through. That means longer wait times for customers – if they decide to wait in line.

“One of our challenges today is that we can’t keep up with the demand that is coming through our stores,” said Brady Brewer, chief marketing officer at Starbucks.

Kitchens are more efficient and new technology can help bartenders work faster, easing those bottlenecks.

One of these innovations is called the Siren System, which among other attributes is designed to cut down on cold beverage making time. Blenders are faster and new dispensers for ingredients like milk and ice are placed in a row, so bartenders can prepare drinks without bending over to get milk or whipped cream under the counter .

The bartenders spent about 36 seconds making a Frappuccino with Siren, down from the 87-second average with the traditional system. Siren also uses ovens that can reheat food in batches instead of individually, to get food to customers more quickly. Some stores are already using the system as part of a test, but Starbucks plans to begin rolling out the system more widely in 2024.

The company also discussed a new coffee machine on Tuesday, which can make a freshly ground cup of decaf or regular coffee and brew in about 30 seconds without the need for a paper filter. It will be available in all US locations within the next three years.

In addition to improving existing locations, Starbucks plans to open 2,000 new stores in the United States by 2025 — aiming to create a broad portfolio that includes delivery and drive-through locations.

More rewards and better service

Technological improvements won’t stop in the kitchen. They are also coming to the mobile app.

Mobile ordering has become an important part of Starbucks’ business. The company had about 27.4 million active bonus members in the quarter ended July, up 13% year-over-year. That’s great – when the app is live.

“As many of you know, our mobile app has experienced a few brief crashes over the past few months,” Starbucks Chief Technology Officer Deb Hall Lefevre said Tuesday.

About a quarter of US sales come through digital channels, Lefevre noted. “Even a few minutes of downtime can mean … confusion in our stores and of course loss of business opportunity,” she said. The company’s top priority is to make the app work reliably, she said: “Everything just needs to work.”

Starbucks is also planning other improvements, such as allowing customers to use mobile ordering and receive rewards for visiting a licensed Starbucks location. It is also working on showing real-time order updates in the app, as well as a joint rewards program with other companies like retailers or airlines.

At the drive, Starbucks was working on “a frictionless payment program that will automatically recognize and authenticate our customers as they pass by,” Lefevre said.

This week, Starbucks also said it will allow members to buy or earn bonus NFTs starting later this year.

‘Deficit in confidence’

These technological upgrades, whether in cafeteria kitchens or payment systems, are designed not only to enhance customer service but also to support employees.

For Starbucks, keeping employees happy is an important part of the plan as it counters growing union efforts. As of Tuesday, the National Labor Relations Board had certified votes to unionize at 224 Starbucks stores and certified that 42 locations voted against unionization.

Starbucks has made it clear that it wants employees to deal directly with the company rather than through a third party.

“We have a trust deficit with our partners,” said Frank Britt, Starbucks’ director of strategy and transformation. “We failed to comply with our obligations to the highest degree,” he said. “We plan to do a little bit of it.”

Finally, Starbucks said this week it will provide eligible employees with assistance in managing their student loan debt and helping them set up savings accounts. Britt also said the company is working to offer workers more flexible scheduling options, with future plans including more extensive sick leave and additional mental health support. .

Starbucks says it can only guarantee benefits to non-union employees.

But Starbucks Workers United, which led the campaign, remained unmoved by the company’s plans. The group held a march outside the company’s headquarters on Tuesday to coincide with the investor event.

“Employees are happy that Starbucks is interested in issues related to our working conditions; we cooperate because we want to have a real say in the process,” the group said in a statement. announcement about investor meeting. “We look forward to negotiating these conditions at the bargaining table.”

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