Starbucks bet that people, not machines, could be the key to his turnaround.
The coffee chain plans to hire more baristas and invest in hours to work in its stores, CEO Brian Niccol said after Starbucks published its results in the second quarter on Tuesday. Starbucks also uses a new algorithm to determine the order in which the store employees make drinks, avoiding long waiting time.
Starbucks plans to deploy the new approach, called the Green Apron service model, from next month. The goal is to have it in about a third of its American locations at the end of its 2025 exercise.
“We note that investments in work rather than equipment are more effective” to obtain customers from their orders and increasing sales, said Niccol.
Starbucks' shares were negotiated by almost 7% down after opening hours on Tuesday after the company described its investment plans in employee hours. The company declared profits from the second quarter which were slightly lower than analysts' estimates.
Investment in employee hours is a start of Starbucks' approach to personnel stores in recent years.
Before Niccol joined the company as CEO and president in September, the chain had cut hours, leading to underestimate in many Starbucks stores.
Instead, Starbucks has added new equipment, such as faster mixers and distributors that have given Baristas just the right amount of ingredient, such as ice or milk, instead of having them measured. He also implemented the siren craft system, which was intended to allocate employees with the most important tasks at busy moments.
“Over the past two years, we have deleted the work of stores, I think that in the hope that the equipment could compensate for the abolition of work,” said Nicol on Tuesday.
“It was not a precise hypothesis with what happened,” he added.
Last quarter, Starbucks led a pilot in 700 of its stores that involved adding more hours of work in these places.
In a store in downtown Chicago, for example, overtime has enabled the store employees to tackle mobile orders and many customers without appointment, said Nicol.
In a suburban store, in the meantime, more hours have gone to the staffing.
Starbucks also bets that a new sequencing algorithm of orders will leave more time for store employees to interact with customers. Niccol said he wanted Starbucks to be a comfortable place for customers.
The algorithm, which Starbucks uses in 400 stores, has reduced customer waiting times by improving the order in which baristas prepare drinks.
“It's much calmer,” said Niccol about stores that use algorithm. “There is the opportunity to provide an excellent connection” between customers and baristas.
Changes are the latest Starbucks underway under Niccol. Others include asking customers to make a purchase to hang out in store and order the baristas to leave handwritten messages and scratches on take -out cups.
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