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Time of India
01-05-2025
- Business
- Time of India
Starbucks accepts automation idea failed, CEO Brian Niccol says, 'That wasn't an accurate ...'
Starbucks is shifting its strategy by investing in more baristas rather than automated systems after discovering that cutting staff in favor of equipment has damaged customer experience, CEO announced at Q2 2025 earnings call. Tired of too many ads? go ad free now "Over the last couple of years, we've been removing labor from the stores, I think with the hope that equipment could offset the removal of the labor," Niccol said. "That wasn't an accurate assumption with what played out." The coffee giant's new approach, called the Green Apron Service model , will launch next month with plans to implement it in about a third of US locations by the end of fiscal year 2025. The model will include a new algorithm to optimize drink preparation sequence and reduce wait times. Starbucks CEO says that company's automated coffee making system will be deployed only in some locations Niccol, who became CEO in September, is slowing the rollout of the company's Siren system—automation technology introduced in 2022 designed to streamline drink-making. Instead, he plans to deploy the technology only in "very targeted" high-volume locations. The company has already tested increased staffing in 700 stores, with plans to expand to between 1,500 and 2,000 US locations by May and around 3,000 by year's end. Niccol acknowledged the additional labor will increase costs but expressed confidence that improved customer experience will drive growth. "The equipment doesn't solve the customer experience that we need to provide," Niccol said, emphasizing his focus on improving hospitality through "small details" like handwritten notes on cups and using ceramic mugs for in-store customers.
Business Insider
29-04-2025
- Business
- Business Insider
Starbucks is staffing up its stores with baristas and ditching machines in the latest stage of its turnaround
Starbucks is betting that people, not machines, might be the key to its turnaround. The coffee chain is planning to hire more baristas and invest in hours for them to work at its stores, CEO Brian Niccol said after Starbucks reported its second-quarter earnings Tuesday. Starbucks is also using a new algorithm to determine the order in which store employees make drinks, avoiding long wait times. Starbucks is planning to roll out the new approach, called the Green Apron Service model, starting next month. The goal is to have it in about a third of its US locations by the end of its 2025 fiscal year. "We're finding that investments in labor rather than equipment are more effective" at getting customers their orders and growing sales, Niccol said. Starbucks' shares were trading nearly 7% lower after hours on Tuesday after the company outlined its plans to invest in employee hours. The company reported second-quarter earnings that were slightly below analysts' estimates. The investment in employee hours is a departure from Starbucks' approach to staffing stores over the last few years. Before Niccol joined the company as CEO and chairman in September, the chain had cut hours, leading to understaffing at many Starbucks stores. Instead, Starbucks added new equipment, such as faster blenders and dispensers that gave baristas just the right amount of an ingredient, such as ice or milk, instead of having them measure it out. It also implemented the Siren Craft System, which was meant to allocate employees to the most important tasks at busy times. "Over the last couple of years, we've been removing labor from the stores, I think with the hope that equipment could offset the removal of the labor," Niccol said on Tuesday. "That wasn't an accurate assumption with what played out," he added. Last quarter, Starbucks ran a pilot at 700 of its stores that involved adding more labor hours at those locations. At one store in downtown Chicago, for instance, the additional hours allowed store employees to tackle mobile orders and lots of walk-in customers at that location, Niccol said. At a suburban store, meanwhile, more hours went to staffing the drive-thru. Starbucks is also betting that a new order sequencing algorithm will leave store employees more time to interact with customers. Niccol has said that he wants Starbucks to be a comfortable place for customers to hang out. The algorithm, which Starbucks is using in 400 stores, has cut down on customer wait times by improving the order in which baristas prepare drinks. "It's a lot calmer," Niccol said of stores that use the algorithm. "There's the opportunity to provide great connection" between customers and baristas. The changes are the latest Starbucks has made under Niccol. Others include asking patrons to make a purchase to hang out in-store and directing baristas to leave hand-written messages and doodles on to-go cups.
