By Juveria Tabassum and Waylon Cunningham
(Reuters) – Starbucks’ new CEO, Brian Niccol, has a vision to make Starbucks into a classic coffeehouse, but he has to contend with an unusual challenge: the company’s mobile orders are as disruptive as they are popular.
“They come in flooding faster than our customer can get there,” Niccol said in a call with investors on Tuesday. He said baristas’ rush to pile those orders on the counter comes at the expense of providing a more personal touch to in-store customers.
Niccol called out mobile ordering as a bottleneck five times during the call, and said the company — which on Tuesday posted a smaller-than-expected drop in comparable sales — would work toward sequencing mobile orders with the help of an algorithm to improve efficiency behind the counter.
In some ways, Starbucks’ abundance of mobile orders has presented an opposite problem to what Niccol faced six years ago when he was CEO of Mexican restaurant chain Chipotle when he oversaw the launching of a mobile app and drive-through lanes dedicated to orders from that app, called Chipotlanes.
Niccol told investors in October 2018 that he believed less than half of Chipotle’s customers knew they could order through digital channels. “We need to improve that dramatically,” he said at the time.
Starbucks introduced mobile ordering in 2015, and customers quickly took advantage of it.
Mobile orders took precedence for Starbucks under Niccol’s predecessor Laxman Narasimhan as the company focused on driving traffic through its rewards program members tapping into offers and discounts on the app.
In contrast, comfortable seating, ceramic mugs and baristas with Sharpies and personalized messages on coffee cups have been at the center of Niccol’s attempt to take Starbucks back to its roots, and the hustle of mobile orders stands counterintuitive to that strategy.
The company is piloting an in-store prioritization algorithm to sequence mobile orders away from the current first-come, first-served basis, said Niccol, who was awarded compensation of nearly $96 million in 2024, a year in which he joined Starbucks as CEO in September. The pay package made Niccol one of the highest-paid executives in corporate America.
“I was in one of our stores this morning where we’ve already started to put this algorithm in,” Niccol said. “That happens behind the scenes, and it smoothes out those rushes of mobile orders such that our teams are able to provide great moments of connection for the in-cafe customer and the mobile order customer as well.”
(Reporting by Juveria Tabassum in Bengaluru and Waylon Cunningham in New York; Editing by Leslie Adler)
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