Baristas at Starbucks are reportedly facing challenges with becoming overworked as they try to keep up with a steady demand for complex and customized beverages. This issue has been compounded by mobile orders and staffing shortages, contributing to increased wait times. The atmosphere in Starbucks locations has also become less inviting, making them less desirable for customers wishing to enjoy their drinks there.
Customers have taken notice of these issues, as evidenced by Starbucks’ recent earnings report, which showed a 3% decline in fourth-quarter revenues to $9.1 billion. Additionally, the company’s quarterly global comparable store sales decreased by 7%. As a result, Starbucks has suspended its fiscal year 2025 guidance to reassess its operations and refine its strategies.
Starbucks is looking to CEO Brian Niccol to lead a turnaround with a strategic initiative named “Back to Starbucks.” Niccol, who was offered $113 million to join the company as its new leader, is a newcomer to the company. The board is counting on his previous success at Chipotle to address Starbucks’ current operational and labor challenges. Analysts suggest that Niccol’s primary focus should be on restoring the in-store experience to its former appeal as a comforting yet affordable luxury.
Sharon Zackfia, an analyst at William Blair & Co., believes that Starbucks needs to reconnect with its core appeal to recapture customer love and loyalty. Niccol has acknowledged the importance of returning to Starbucks’ roots as a welcoming coffeehouse.
To enhance the customer experience, Niccol plans to streamline the menu and ensure that orders are completed within four minutes. Moreover, he aims to separate mobile order pickups from in-store experiences and manage the customization of drinks sensibly.
The evolution of Starbucks over the past decade reflects significant changes in consumer behavior, with mobile orders comprising over 30% of all transactions. Combined with drive-thru services, these account for approximately 70% of sales in American stores. The increase in demand for complex, cold beverages often challenges the existing infrastructure, leading to longer wait times and increased workloads for baristas.
Michelle Eisen, a long-term Starbucks employee and union member, remarked that the pressure on hourly workers has intensified over the last five years. Economists like Stephan Meier believe that investing in more staffing could be crucial in creating a positive atmosphere and improving the overall customer experience.
More than 500 Starbucks locations have voted to unionize, involving over 11,000 baristas. While the previous CEO, Howard Schultz, did not always respond favorably to unionization efforts, Niccol has taken a more cooperative approach, expressing a commitment to bargaining in good faith.
Starbucks CFO Rachel Ruggeri noted improvements in staffing during the recent earnings call, though she acknowledged that more work is needed. Niccol emphasized the importance of correctly staffing stores, particularly during peak hours, and highlighted the development of leadership from within the company.
Starbucks employee Zarian Pouncy expressed hope for a return to the comforting environment traditionally associated with coffee shop culture, believing that simplifying operations and focusing on the cultural aspects of a coffeehouse could bring satisfaction back to baristas and customers alike.
