Dive Brief:
- Starbucks says it is fueling better customer experience through a combination of drink making process improvements and employee experience investments, executives said on a Q1 2025 earnings call Tuesday.
- The sequence in which orders are fulfilled, more than drink-making capacity, is slowing down Starbucks’ order fulfillment speed, according to CEO Brian Niccol. The company is adjusting its processes and investing in more employee hours to hit its goal of cutting its average drive-thru and cafe fulfillment time to four minutes.
- Starbucks is investing in employee benefits as well, including doubling paid parental leave for eligible U.S. store associates in the last quarter. “To deliver a great customer experience, we also have to deliver a great partner experience,” Niccol said during the call.
Dive Insight:
While Niccol sees a positive response to Starbucks’ early turnaround efforts, the struggling coffee company still has work to do.
Global comparable store sales fell 4% year over year during the first quarter of 2025, according to a company earnings report. Total revenue was flat year over year at $9.4 billion.
The results featured some bright points. Non-Starbucks Rewards customer traffic grew quarter over quarter, while Starbucks Rewards membership and Starbucks Rewards spend grew both quarter over quarter and year over year, according to Niccol.
Starbucks’ emphasis on the quality of its coffee and its experience in its messaging drove this growth, according to Niccol. However, marketing is only half of the equation.
Niccol wants to create an experience where “every time you come into a Starbucks, not only do you get your coffee or your drink, but you also get this connection.”
Starbucks’ baristas are essential to creating positive experiences that can forge those connections.
“A key part of the premium value we provide is quickly and consistently delivering a high-quality handcrafted beverage to customers,” Niccol said. “The hand off from our barista to the customer is our brand moment of truth, and we've been working hard to get that moment right.”
Starbucks made a commitment to promote from within for 90% of retail leadership roles over the next three years, according to Niccol. This, combined with other employee investments, helped drive improved shift completion, average hours per associate and associate retention throughout the quarter.
Starbucks is planning a pilot at 700 stores that will look at staffing levels to find the right level for optimal employee and customer experiences as well, according to Niccol. The findings from this effort will be applied across the chain.
Achieving four-minute order wait times remains another major goal for the company.
The company introduced new coffee and tea making routines and simplified beverage creation, according to Niccol. Additionally, Starbucks is fighting inefficiency with the pilot of an in-store prioritization algorithm that will help sequence orders — particularly when to prioritize mobile versus in-store customers.
“In the majority of our stores, just kind of putting the right process, the right deployment, combined with the algorithm, we see a big unlock in transaction throughput capability,” Niccol said.
The company is dividing its stores by transaction volume as well. This helped determine the top quartile of stores whose throughput is limited by the high number of orders, rather than by inefficient processes, according to Niccol. These locations are being targeted for Siren system equipment upgrades, which can help associates make drinks faster.
