As part of Starbucks’ plan to speed up service

New York
CNN business

Starbucks is rolling out a broad plan to fuel growth over the next three years — from faster Frappuccinos to more digital rewards.

In the report: New equipment that makes it easy for baristas to prepare complicated drinks in seconds. Thousands of new US stores. A more reliable mobile app with new rewards. And perhaps enough perks and new perks to sway workers from joining a union.

The news came Tuesday at the company’s investor day, where Starbucks ( SBUX ) executives spent hours explaining what the next few years will look like.

“We’re not reinventing what we do,” interim CEO Howard Schultz said Tuesday. “We’re reinventing how we do it.” Schultz will remain in his position until CEO Laxman Narasimhan officially takes over in April.

Schultz laid out a broad version of the new plan in an open letter to employees in July, saying “Starbucks’ business as currently structured is not set up to fully meet our evolution, needs and expectations.” [employees] or customers. It is not designed for the future we want for ourselves and the communities we serve.’

Starbucks needs to win over its customers to accelerate growth. Over the years, “the business has changed tremendously,” Schultz said.

Customers are increasingly ordering through the company’s mobile app and drive-thrus. They are opting for cold drinks, which make up most of the demand for drinks today. Sometimes they even order TikTok-inspired concoctions so elaborate, an iced vanilla latte looks like a simple black coffee.

These new consumption habits create complexity for employees who are tasked with preparing time-consuming recipes in person, via an app, or in the car. This means more waiting time for customers if they decide to wait in line.

“One of our challenges today is that we’re not able to meet the demand that’s coming through our stores,” said Brady Brewer, Starbucks chief marketing officer.

More efficient kitchens and new technology can help baristas work faster, easing those bottlenecks.

One of these improvements is called the Siren System, which is designed to reduce the time it takes to make cold drinks, among other features. Faster blenders and new dispensers for ingredients like milk and ice are set in a line, so baristas can prepare the drink without bending down to reach for milk or heavy cream stashed under the counter.

The Siren System places appliances above the counter, not below.

Baristas spend about 36 seconds making a Frappuccino with the Siren, down from an average of about 87 seconds with the traditional system. Sirens also uses ovens that can heat food in batches, rather than individually, to get food to customers faster. Some stores are already using the system as part of a trial, but Starbucks plans to start rolling it out in 2024.

The company also discussed a new coffee machine Tuesday that makes a cup of ground and brewed coffee in about 30 seconds without a paper filter. The machines should be in all US locations within the next three years.

In addition to improving current locations, Starbucks plans to open 2,000 new stores in the United States by 2025, with the goal of creating a broad portfolio that includes drive-thru and delivery locations.

Technological improvements will not stop in the kitchen. They will also come to the mobile app.

Mobile ordering has become an important part of Starbucks’ business. The company had about 27.4 million active members in the quarter that ended in July, up 13% year over year. It’s great when the app is working.

“As many of you know, our mobile app has experienced a few brief outages over the past few months,” Starbucks Chief Technology Officer Deb Hall Lefevre said Tuesday.

About a quarter of US sales come from digital channels, Lefevre noted. “Even a few minutes of downtime … can lead to confusion in our stores and, of course, lost business opportunities,” he said. The company’s first priority is to make the app work reliably, he said: “Things just have to work.”

Starbucks also plans other improvements, such as allowing customers to use mobile ordering and collect rewards points when visiting an authorized Starbucks location. It is also working on showing real-time order updates on the app, as well as a joint rewards program with other companies such as retailers or airlines.

At the drive-thru, Starbucks is working on a “frictionless payment program” that will automatically recognize and authenticate our customers as they walk through, Lefevre said.

Starbucks also said this week that it would allow rewards members to buy or earn NFTs later this year.

These technological innovations, whether in cafeteria kitchens or payment systems, are designed not only to improve customer service, but also to help employees.

For Starbucks, keeping workers happy is an important part of the plan as it faces increasing unionization efforts. As of Tuesday, the National Labor Relations Board has certified unionization votes at 224 Starbucks stores, and 42 locations have certified that they have voted against unionization.

Starbucks has made it clear that they want employees to deal directly with the company, rather than going through a third party.

“We have a trust deficit with our partners,” Starbucks chief strategy and transformation officer Frank Britt said Tuesday. “We have not fulfilled our obligations to the highest level,” he said. “We plan to do quite a bit about it.”

To that end, Starbucks said this week that it will offer eligible employees help managing student loan debt and helping them set up savings accounts. Britt also said the company is working to give employees more flexible scheduling options, with future plans including more generous sick time and additional mental health support.

Starbucks has said it can only guarantee benefits for non-union workers.

But Starbucks Workers United, which has spearheaded the campaign, isn’t thrilled with the company’s plan. The group organized a march outside the company’s headquarters on Tuesday to coincide with the investor event.

“Employees are pleased that Starbucks is taking an interest in issues related to our working conditions; We became a union because we would like to have a real voice in this process”, said the group regarding the investors’ meeting. “We look forward to negotiating these terms at the negotiating table.”