A key pillar of the turnaround plan at Starbucks that's being spearheaded by CEO Brian Niccol is to focus more on human connection between employees and customers and put less emphasis on technology. So what does that mean for Chief Technology Officer Deb Hall Lefevre?
“The technology story here at Starbucks—guess what?—the star of the story is not technology,” says Lefevre. “It's human connection in our coffee houses.”
Technology, she says, will continue to be weaved throughout Starbucks’ strategy, ranging from in-store automation investments to newer technologies like generative artificial intelligence. But technology is now intended to work more quietly in the background. That’s a reframing of thinking at Starbucks, which was an early adopter and fast mover in mobile, a technological advancement that the restaurant chain mastered by courting 34 million active Starbucks Rewards loyalty members using its app in the U.S. alone.
During a 16-year career at rival McDonald’s, where Lefevre held various leadership roles including serving as chief information officer of the U.S. business, she kept a close eye on her rival's technological prowess. “I often envied the tech that I was seeing, from a consumer perspective, at Starbucks,” says Lefevre. “They were the benchmark for all of us in the industry.”
Starbucks had perhaps too much success on mobile and lost its way a bit with how the physical stores were being managed. Frequently heralded as a much-desired “third place,” a space to convene between work and home, some critics lamented the stores had become too impersonal. Investments tilted toward the mobile experience, even leading Starbucks to open minimalist stores that were pick-up only locations for takeout orders. This led to some dissatisfaction as the guest experience felt more impersonal. Mobile orders were so popular they would pile up and result in long wait times, discouraging both in-person and even online shoppers.
Niccol was recruited last year from Chipotle Mexican Grill to get the coffee giant back on track, a turnaround that's still a work in progress—Starbucks recently reported a fifth consecutive quarterly decline in U.S. comparable store sales.
Some early changes are operational, including simplifying the menu and launching fewer limited edition items. Others are intended to make the chain’s coffee shops feel more personal, like bringing back handwritten names and notes after using printed stickers for a time. That’s one example of Starbucks ceding efficiency gains from technology in favor of warmer hospitality.
Niccol and Lefevre are encouraged by a recent pilot last quarter in 700 locations where Starbucks increased its investment in staffing and adjusted the sequencing algorithm for orders, which helped reduce wait times for in-cafe and drive-thru customers without hurting those buying via mobile. Starbucks says that on average, wait times dropped by two minutes, bringing 75% of cafe order wait times to under four minutes at peak demand.
Lefevre, who joined Starbucks in 2022, says these adjustments can give Starbucks’ baristas more time to create a “moment of connection” with customers.
Other more subtle technology investments include the 200,000 connected devices Starbucks has deployed to 10,000 company-operated stores, one of the largest Internet of Things (IoT) rollouts in the quick-service restaurant sector, according to Lefevre. Digital menu boards will be rolled out across U.S.-company owned and operated stores over the next 18 months, which can be updated and monitored remotely, saving time for staff in the stores. Sensors are able to measure and monitor the thickness of coffee that’s being ground on site and improve the operational efficiency of refrigerators and freezers.
Starbucks has also made tweaks to improve the mobile experience, including sharing even more precise estimates for wait times for when an order is ready. Another update that will roll out this summer is around price transparency, more clearly explaining how each modification that a customer makes to customize a drink will affect the final price.
Lefevre’s AI investments include some of the basics, like offering Microsoft Copilot to assist customer support employees and corporate employees. Starbucks has also unveiled a digital tool to improve scheduling for baristas. The new feature gives employees a wider pool of stores across a district to swap shifts, resulting in half a million more shifts filled in the most recent fiscal second quarter ending March 30 from the prior-year period.
“It’s a win for our customers because they’re walking into fully staffed stores,” says Lefevre.
Lefevre imagines that future use cases for AI and other emerging technologies could range from generative AI being used to speed up the in-store training experience, to using augmented reality to help baristas track inventory, and even a customer-facing virtual “AI barista” that could help customers select their order.
“It’s a world of possibilities across the board, from store design to supply chain,” says Lefevre. “There’s just so many things that we’re thinking about, day in and day out.”
John Kell
Send thoughts or suggestions to CIO Intelligence here.
