Howard Schultz, the former CEO and chairman of Starbucks, recently shared some suggestions on how the Seattle-based coffee giant can boost its business after the company’s shares dropped by more than 12% last week due to missed analyst expectations for its most recent quarter. Schultz recommended that the company overhaul its go-to-market strategy and closely examine their mobile ordering platform. He emphasized the importance of senior leaders spending more time with employees and customers to reinvent the mobile ordering experience.
Starbucks was an early innovator in mobile order-ahead technology, but according to Schultz, there is room for improvement to make the experience more uplifting. The company reported that 31% of total transactions at its U.S. stores were made via the app as of March 31, with some customers experiencing long wait times and product unavailability when using the mobile order-ahead feature. Starbucks CEO Laxman Narasimhan acknowledged the challenges and mentioned efforts to improve operational throughput and wait time estimates in the app.
In response to Schultz’s post, a Seattle-based consultant criticized a Starbucks store remodel that prioritized mobile order customers over those who ordered in-person, resulting in an impersonal and unwelcoming experience. Schultz, known for championing the concept of Starbucks as a “third place,” advised focusing on creating experiences rather than transactions. He highlighted the importance of the in-store experience and the need to align with the company’s values and culture.
Despite facing challenges with the loyalty program and experiencing a decline in membership numbers, Starbucks is investing in digitizing its stores and personalizing customer experiences to drive growth. The company plans to make its app available to a wider audience beyond Starbucks Rewards members and introduce new exclusive in-app offers. Starbucks has been piloting a partnership with Gopuff for delivery services and investing in AI technology to enhance operations and target customers more effectively.
Starbucks’ global revenue decreased by 2% in the last quarter, reflecting the impact of a cautious consumer and economic uncertainty. Schultz, who returned to the company in 2022 as interim CEO before handing over the role to Narasimhan, expressed confidence in Starbucks’ rebound in China but noted that operations in the U.S. are the primary reason for the company’s recent challenges. He emphasized the importance of culture and servant leadership in guiding the company’s path forward and suggested focusing on inspiring employees and delighting customers to drive future success.
In conclusion, Schultz’s advice for Starbucks to improve its business includes prioritizing the in-store experience, reinventing the mobile ordering platform, and maintaining a strong company culture. As Starbucks navigates challenges such as declining membership in its loyalty program and slowing revenue growth, the company is investing in technology and partnerships to enhance its operations and customer engagement. Schultz’s insights, rooted in his decades of experience at Starbucks, offer valuable guidance for the company as it works towards recovery and long-term success.
