FX168 Financial News (North America) News Starbucks cafes across the country are changing the way beverage orders are processed and other adjustments are being made to reduce the bottlenecks and long waits plaguing the chain. The reform comes as Starbucks prepares to handle an expected surge in orders for its mobile app.

The core of the program is Starbucks' “Siren Craft System,” a series of processes aimed at making barists' jobs easier and providing faster service to customers. Starbucks said more than 10% of its 10,000 stores have implemented the system, which includes changing the production order of hot and cold drinks. According to the company, the system will be ready for use across North America by the end of July.

Executives hope these changes will give Starbucks a much-needed boost. In April of this year, the company reported disappointing second-quarter results, with same-store sales in the US falling 3% and customer traffic falling 7%. The coffee chain lowered its 2024 forecast.

Starbucks reports that the mobile app has an unfulfilled rate of around 15%, and there are fewer occasional customers. CEO Laxman Narasimhan mentioned the need to improve the store.

Katie Young, senior vice president of store operations at Starbucks, said the most immediate action cafes need to take is to better cope with unexpected situations. “It's the ability to respond flexibly to things we can't predict,” she said in an interview.

Store changes will be key this month as Starbucks began opening its app to non-rewards members on Monday, a move the company believes will increase traffic and orders.

Peter Saleh, managing director and analyst at BTIG, said, “My feeling is that some stores are in high demand and the kitchen area is very small, so you have to find ways to be more efficient.”

Losing customers due to slow orders and other in-store issues could cost Starbucks in a particularly vulnerable time. Faced with continued inflation, Americans have become cost-conscious, and in some cases, they have reduced their morning or afternoon drink and snack consumption. Narasimhan said in April that consumers are more cautious about spending.

Starbucks has done something unusual in recent weeks, joining the ranks of great deals and launching a $5 food and drink package. Conveying value to customers is also part of their business acquisition plan.

alarm system

Young said Starbucks has been diagnosing bottlenecks for over a year since the company launched a reshaping program in 2022. At the time, Howard Schultz took the helm, and he returned to the company against the backdrop of a burgeoning trade union movement and shifting consumer preferences. The cafe's ongoing transformation was first previewed in the fall of that year and will be launched in the next few years. Narasinghan succeeded Schultz in March 2023.

The Siren system process was developed based on feedback from workers about what issues prevented them from making drinks and connecting with customers.

Starbucks said it plans to add a position similar to order collectors, or “commanders,” to the restaurant production line. They leave production jobs to help solve congestion problems in cafes, handle tasks such as replenishment, or help when unexpected people arrive. The company plans to train existing employees for this role, or add new baristas if necessary.

“One pain point we found was that our espresso machine was always on, which was one of the reasons our partners couldn't sign in. We also discovered that you don't necessarily know which part of the store is going to get crowded,” Young said. “We need a partner who can put down production and help when business is busy.”

Starbucks said they will also change the order in which drinks are made. Previously, cold drinks were prioritized from beginning to end, even when orders for hot drinks were delivered first, because espresso was the last step. For example, if someone orders two drinks, this may cause the drive-out pickup channel to be congested, because while the hot drink is still being made, the cold drink is ready.

Macoy McGlaughlin, store manager at Seattle First and Walker Starbucks, said that producing drinks in the order they are placed can make the process faster and more streamlined.

“We've actually properly ranked hot and cold drinks, and cold drinks have always been as popular as before, so we can really provide a consistent experience for our customers. So we actually arranged it in the order in which customers came in,” McGlaughlin said, adding that the cafe felt busier, but customers in the store and skip-the-go pickup drank drinks faster.

The company said baristas will also have more control over the company's digital production manager, an iPad system that controls order sequencing for various channels such as cafes, mobile orders, and drive-free meal pickup. Employees will have more flexibility in changing order priorities.

Starbucks app extensions

Young said changes to the app added a sense of urgency to the launch of Siren Training. She believes the store will be prepared if traffic increases.

Mobile ordering and payment will also be offered on third-party platforms to reach more customers.

At a time when traffic and workload are likely to increase, some baristas have been raising questions about staffing and scheduling for years, particularly those trying to organize with workers' federations. Workers represented by the union have always made it a top priority issue at meetings of the Internal Investigations and Negotiations Committee.

Starbucks said it has made significant progress in staffing and scheduling in the past two years.

The Siren System was first launched on Investor Day in 2022 under Howard Schultz. Historically, Starbucks has never been slow to do anything. They move fast, find something they love and launch it fast.

Young said changes to the Siren system “drastically reduced” order waiting times. Starbucks said that in stores where the company uses the Siren system to optimize operations, there was an increase in the number of customers during peak hours, which is estimated to be equivalent to 1 percentage point of comparable sales per year.

“We are very confident about our investment in our staffing system and all the accuracy we can provide,” Young said. “But there's no system or internal effort to predict that until today, a group of high school students decided to gather all of their friends and pop up at 2 p.m., and usually we don't have much business at this time.”

The company said it will slowly launch new devices under the same Siren name, including custom ice dispensers, milk dispensing systems, and faster blenders to reduce barists' steps and get drinks to customers faster. Young said the equipment investment will take years. The updated equipment, along with the new in-store training process, has brought a significant return on investment. By the end of this year, 10% of stores will have Siren equipment.

Young said Starbucks wants customers to feel that wait times are better managed and that “everyone feels comfortable even during busy times.”