Tech Check is a regular column on restaurant technology by Senior Editor Joe Guszkowski. It's also a newsletter.
Less than a year into his job as Starbucks CEO, Brian Niccol appears to be on his way to solving one of the chain’s biggest issues: mobile ordering.
After the coffee giant hired him in August, the former Chipotle chief quickly identified mobile orders as an Achilles’ heel. The chain’s shops are frequently flooded by those orders, which pulls employees away from helping customers and creates traffic jams in the store. The ensuing bad vibes have been partially blamed for the chain’s recent sales slump.
So last week, during his second earnings call as CEO, Niccol laid out a plan to fix it. Instead of processing mobile orders in the order in which they arrive, he said, Starbucks is testing an algorithm that organizes them in a more logical way.
Niccol noted, for instance, that employees often prepare mobile orders faster than the customers can even get to the store. Then they end up sitting on the counter, losing freshness and taking up space. The new system would smooth out those inefficiencies and help employees make better use of their time.
“It takes the stress out of the system of having the partner have to figure out how to solve these mobile orders that just came in,” Niccol told analysts last week. “It sequences those mobile orders so that it can allow the [in-person] order to get fulfilled in a timely fashion and with a touch of humanity.”
Starbucks is also experimenting with allowing customers to sign up for a time slot when they’ll pick up their drink, he added, which would give Starbucks another way to spread out order volume.
At this point, you may be thinking: Wait a minute… Starbucks doesn’t do any of this stuff already?
Apparently not. Today, ordering at Starbucks happens on a first come, first served basis, like the meat counter at the grocery store. In the Starbucks app, there’s not even an option to order a drink for a future time.
This is all a bit shocking from a large chain that does a lot of business through its app and has a reputation as a leader on technology. And it speaks to how far Starbucks strayed under prior leadership.
“Frankly, I’m surprised [order sequencing at Starbucks] doesn’t exist today,” said Noah Glass, CEO of online ordering provider Olo, which has long offered just the kind of throttling mechanism Niccol is describing. “It’s a pretty basic capability for a digital ordering platform to be able to prioritize orders and sequence orders accordingly.”
So the typically trend-setting Starbucks finds itself in an unusual spot: behind the times. The good news is, its mobile ordering headaches may have a simple solution. The algorithm is live in just three stores now, and appears to be working well. Niccol said he visited one of the locations and there was no congestion at the counter. “It's just a much more pleasant, peaceful coffee experience,” he said.
The CEO did not go into detail about how the sequencing actually works. Glass noted that there are many ways the software could be programmed. It could prioritize the most profitable orders, for instance, like ones that come through the Starbucks app rather than third-party platforms like DoorDash or Uber Eats. Or it could rank them based on how many loyalty points customers have.
Brandon Barton, CEO of kiosk ordering company Bite, offered another possibility: The software could group similar items together so they can be prepared in batches. “There are efficiencies in steaming twice as much milk for two cappuccinos, even if they’re not the same order,” he said.
The other piece of this puzzle is quote times. Starbucks will want those to be dialed in so that customers arrive as close as possible to when their drink hits the counter. That will help limit pileups and ensure drink and food quality.
Glass, who has been thinking about problems like this for nearly two decades, calls this “wait-time zero”
“That’s the nirvana,” he said. “That will totally change the guest experience.”
Of course, the new system might lead to longer quote times for some customers as orders get sequenced out. But the chain is intent on keeping service fast. It has identified 15 minutes as a tipping point for mobile customers and wants to stay within that range.
“If you can do these promise times in such a way where it doesn't get past, let's call it, 12 minutes to 15 minutes, then we know we're going to delight the mobile order customer,” Niccol said.
Meanwhile, it is focusing on a four-minute turnaround for in-store customers, who are the key constituents in Niccol’s turnaround plan. They should ultimately be the biggest beneficiaries of the new sequencing system.
“If they do this correctly, they will be sure to prioritize the people that are in-store and in the drive-thru, because they’re standing there, and hopefully be able to deliver accurate timing for people that are not there,” Barton said.