Brian Niccol, future CEO of Starbucks, could also be targeting a mobile app

It has develop into a well-recognized sight at Starbucks Cafes: a counter filled with mobile orders, frustrated customers waiting for his or her ordered drinks and overwhelmed baristas attempting to sustain with all of it.

Solving this problem will likely be at the highest of the to-do list for brand spanking new CEO Brian Niccol, who goals to get the struggling coffee giant back heading in the right direction when he takes office on September 9.

Investors and executives cite operational problems as one reason for the chain's declining sales in recent quarters. Other reasons for the recent drop in store sales include weaker consumers, boycotts and the decline of the Starbucks brand.

Former CEO Howard Schultz, who has no official role at the corporate but stays involved, has also pointed the finger on the mobile app, saying it has develop into “the biggest Achilles heel for Starbucks,” in an episode of Podcast “Acquired” in June.

Mobile orders account for a couple of third of Starbucks' total revenue and are typically more complicated. While add-ons like cold foam or syrup are more profitable for Starbucks, they have a tendency to take up more of the baristas' time, frustrating each them and customers.

“I agree with Howard Schultz,” said Robert Byrne, senior director of consumer research at Technomic, a restaurant research firm. “It's not in the data – it's in the store. And that's the problem.”

At the top of April, current CEO Laxman Narasimhan said the corporate was struggling to fulfill demand within the mornings – and was driving away some customers with long wait times.

Schultz said he experienced the issue himself when he visited a Chicago location at 8 a.m.

“Everyone shows up, and all of a sudden we have a mosh pit, and that's not Starbucks,” Schultz said on the episode “Acquired.”

One of the important thing ways Niccol can reduce crowds at Starbucks is by making mobile ordering more efficient.

When Schultz built Starbucks into the coffee giant it’s today, he positioned it as a “third place” between work and residential. Since then, the chain has lost that repute as more customers embrace the convenience of mobile ordering and like to not linger in cafes.

“Because it’s a beverage and I often drink it in the car or on the go, it has to be incredibly convenient,” said Byrne.

However, Starbucks has not made any significant operational adjustments to arrange for this alteration in consumer behavior.

In 2017, Schultz stepped down as CEO for a second time, handing the reins to Kevin Johnson. Before joining the coffee chain as chief operating officer, Johnson was CEO of technology company Juniper Networks. Under his leadership, Starbucks invested in technology and continued to grow digital sales, however the restaurant operation was already struggling when he left the corporate.

Schultz stepped down as interim CEO when Johnson retired in 2022.

“The company did not properly anticipate the technical improvements that should have been made to prevent what happened. … The stock was at a record high, the company did not invest proactively and did not pay attention to the speed of the mobile app and its development until it was too late,” Schultz said.

Shareholders have also felt the frustration over digital ordering – and see this as a critical area that Niccol must address.

“The problem in New York City, for example, is the wait time,” says Nancy Tengler, CEO and chief investment officer of Laffer Tengler Investments, which owns shares in each Starbucks and Chipotle. “And then mobile orders take priority over in-store orders.” [Niccol’s] We have to by some means reverse this so that folks spend more time in stores and spend more cash.”

The problems with mobile ordering have increased pressure on baristas. Burnout, fueled partly by the app, has inspired some employees to unionize starting in 2021.

In November of this 12 months, Starbucks Workers United, which now represents staff at about 450 of the chain's U.S. stores, urged the corporate to disable mobile ordering during ongoing promotions. (Starbucks said on the time that it was already within the technique of enabling the change.)

Digital sales is not any longer the identical albatross for Niccol’s current employer, Chipotle.

In the last quarter, 35% of sales comes from online ordersThe pandemic encouraged a sustained shift toward online ordering, with the share of digital orders skyrocketing from 18% in 2019.

When Niccol joined Chipotle in 2018, most restaurants had already arrange a second prep line for digital orders to avoid bottlenecks as online sales became increasingly essential to the corporate. That same 12 months, the corporate also began establishing drive-thru lanes just for choosing up online orders, which it calls “Chipotlanes.”

In his six and a half years at Chipotle, Niccol and his executives boosted digital sales through a wide range of promotions: favorite orders from sports stars, limited-time offers, a rewards program and the long-awaited launch of quesadillas. Quesadillas, specifically, became a digital-only option because they’d have otherwise slowed down operations.

Chipotle also tested automating the production of burrito bowls, which could be ordered through its mobile app, through a partnership with robotics company Hyphen.

Starbucks has taken steps to hurry up service and improve the barista experience.

In 2022, under Schultz's leadership, Starbucks introduced a reinvention plan that included eliminating bottlenecks with latest equipment and other measures to hurry up service.

Narasimhan has largely stuck to that strategy. Since February, the mobile app has finally shown customers the status of their orders, giving them a greater idea of ​​when their drink might be ready. And in late July, Starbucks rolled out its Siren Craft System across North America, a set of processes designed to make drinks faster and make baristas' jobs easier.

But Starbucks' problem may require more drastic measures.

For example, the rollout of the machines has been slow: About 40% of North American locations are expected to put in the brand new machines by the top of fiscal 12 months 2026. Accelerating that schedule could halve service times – as promised on the 2022 Investor Day – and reduce the burden on baristas.

“It is just not a simple task to do that, it would require time and training and investment and [capital expenditure]said Andrew Charles, analyst at TD Cowen.

“We believe Brian has tremendous credibility. If he can tell investors, 'This is the answer to our problem,' and explain why he believes that, he will get through,” Charles said.