Starbucks battles mobile pick-up congestion
The Mobile Order & Pay app has been such a success for Starbucks that it’s causing bottlenecks in its highest-volume stores at peak times and leading some impatient customers to walk out.
“This congestion resulted in some number of customers who either entered the store or considered visiting a Starbucks store and then did not complete a transaction,” said Kevin Johnson, chief operating officer, last week on Starbucks’ first-quarter conference call.
The long lines at peak hours were the “most significant contributing factor” to the company’s 3 percent comp gain in the quarter, its worst quarterly increase since 2009 and below Wall Street’s targets. Revenue forecasts were trimmed for the year.
Introduced in 2015 to help customers avoid lines, Mobile Order & Pay accounted for seven percent of U.S. orders in the last quarter, up from three percent in the prior year. The congestion is coming from 1,200 doors, where more than 20 percent of transaction volume comes from Mobile Order & Pay at peak.
To address the problem, Starbucks is adding new roles and resources to specifically support Mobile Order & Pay, including adding one or two more baristas focused on mobile ordering and payment at busy stores during peak hours. It’s also testing sending text alerts to customers when orders are ready. Said Adam Brotman, EVP of global retail, on the call, “Really, it’s just about getting after a better deployment method for those barista roles in those stores.”
Starbucks noted that it has continually made adjustments over the last five to six years to manage expanding traffic and other check-out disruptions. In 2014, the need to warm new pastries was slowing pickup. But this is the first logjam caused by mobile orders and Mobile Order & Pay is expected to expand with AI-based voice command ordering arriving soon.
- Starbucks Reports Record Holiday and Record Q1 FY17 Results – Starbucks
- Starbucks (SBUX) Q1 2017 Results – Earnings Call Transcript – Seeking Alpha
- Starbucks must ease mobile order pileup to get customers in line – Reuters
- Starbucks still has a problem with long lines – CNN Money
- Starbucks Says ‘Congestion’ in Stores Crimped Sales – Associated Press/ABC News
DISCUSSION QUESTIONS: Is the increased use of mobile ordering bound to add more unpredictability to the pick-up process across retail? What steps could Starbucks be taking to ease congestion caused by mobile pickup?