Starbucks now plans to draw customers using AI and robotics
What's the story
Starbucks is investing heavily in artificial intelligence (AI) and robotics technology to improve its customer service. The coffee giant has started using a robot for taking orders at some drive-thru locations. Inside stores, baristas are assisted by a virtual personal assistant that helps them remember recipes and manage their schedules efficiently.
Operational efficiency
Scanning tool to avoid out-of-stock situations
In a bid to tackle the tedious task of inventory counting, Starbucks has introduced a scanning tool. The move is part of the company's broader strategy to avoid out-of-stock situations that have previously disappointed customers. These tech advancements are part of Starbucks's multi-million dollar investment plan aimed at winning back customers after years of declining sales.
Sales recovery
Sales increase amid cost concerns
Starbucks recently reported its first sales increase in two years at established stores across the US, its largest market accounting for about 70% of revenue. However, despite this positive development, the company's share price fell by 5%. Investors are worried that all this spending, including $500 million to boost staffing levels, could hurt profits.
Future prospects
Niccol optimistic about profit recovery
Starbucks CEO Brian Niccol is confident that consistent sales growth will eventually solve the profit issue. He said, "I think that's all going to come. I really do believe we've got the right plan in place." Niccol joined Starbucks in 2024 when the company was facing several challenges, including customer backlash over price hikes and competition from other brands.
Strategic changes
Reviving the brand after challenging years
To revive Starbucks, Niccol halted price hikes, simplified the menu, and set a target for baristas to complete orders in four minutes or less. The firm also cut thousands of corporate roles, closed underperforming stores, and sold off a large stake in its China business.
Store upgrades
Enhancing customer experience with personal touches
To improve customer experience, Starbucks has started encouraging its staff to handwrite customer names on cups. The company is also upgrading stores with comfortable seating, fresh paint, and ceramic mugs as part of a $150,000-per-store "uplift" plan. Alongside these changes, Starbucks is testing an AI chatbot that can suggest drinks based on customers' moods and allow pre-ordering to reduce wait times.
Tech trials
AI order taker at drive-thrus
At its drive-thrus, Starbucks is testing an AI system to take orders and free up staff to focus on hospitality or making coffees. This comes as part of Niccol's ambitious expansion plans, especially overseas where the firm hopes to nearly double its footprint to almost 40,000 stores in the coming years.