Starbucks aims to enhance its stores for both customers and baristas.

• The "Siren Craft System" has been introduced by Starbucks' baristas, who are now implementing changes in the way orders are processed and made.
• In response to inflation, some Americans have become cost-conscious, prompting the coffee giant to reduce bottlenecks in stores and regain the trust of occasional customers.
• The Siren Craft System has been used by Starbucks to optimize operations in stores, resulting in an increase in peak throughput and an estimated annual boost in same-store sales.

Across the country, cafes are modifying their drink order procedures to minimize bottlenecks and long wait times.

As the coffee giant prepares for an anticipated surge in orders through its mobile app, an overhaul is announced.

The "Siren Craft System" is a series of processes implemented by Starbucks to simplify baristas' jobs and speed up service times for customers. The system has already been implemented in over 10% of Starbucks' 10,000 stores, including changes to the production order for hot and cold drinks. Starbucks plans to deploy the system across North America by the end of July.

Starbucks executives hope that the upcoming changes will revitalize the company, as U.S. same-store sales fell 3% and traffic dropped 7% in the second quarter, resulting in a disappointing financial report. The coffee chain subsequently cut its 2024 outlook.

Laxman Narasimhan, Starbucks CEO, stated that the company's mobile app orders had incomplete rates in the mid-teens and that occasional customers visited stores less. He emphasized the need for improvements to be made to the stores.

Starbucks' SVP of store operations, Katie Young, emphasized the need for cafes to improve their handling of unexpected situations in an interview with CNBC.

She stated that it's the capacity to adapt to unforeseen circumstances.

This month, Starbucks has started allowing non-rewards members to use its app, which the company hopes will boost traffic and orders.

According to Peter Saleh, BTIG's Managing Director, there is high demand for certain products in certain stores, and the small size of the kitchen requires finding ways to increase efficiency.

The loss of customers due to slow orders and other store inconveniences could negatively impact Starbucks during a sensitive period. With inflation continuing, some Americans are cutting back on their morning or afternoon beverages and snacks. Narasimhan stated in April that consumers are becoming more cautious with their spending.

Recently, Starbucks has taken an unusual step by introducing a $5 food and beverage combo option, in addition to communicating value to customers in order to boost business.

The Siren Craft System

Since the company's reinvention plan rollout in 2022, Starbucks has been addressing the bottleneck issue for more than a year, said Young. At the time, Howard Schultz was in charge, having returned during a burgeoning unionization movement and shifts in consumer preferences. The changes in cafes were first previewed that fall and were to be rolled out in the years to come. In March 2023, Narasimhan took over for Schultz.

The Siren Craft System's development was influenced by feedback from workers regarding the obstacles that prevented them from producing beverages and engaging with customers.

Starbucks plans to introduce a new role, a "play caller," to help solve logjams in cafes. This role will be responsible for tasks such as restocking cups and assisting during unexpected crowds. The company will either train existing workers for this role or potentially hire new baristas if needed.

"We identified a pain point where our espresso machine was always running, preventing our partners from checking in. Additionally, we discovered that our partners were not aware of which store sections would become crowded. To address this issue, we required a dedicated partner to assist during busy times."

Starbucks will now prioritize hot beverage orders over cold drinks, even if a cold drink order was placed first. This change will prevent a traffic jam in the drive-thru, as the hot drink will be ready before the cold item is ready.

Streamlining the process of producing beverages in the order they were placed is faster, according to Macoy McGlaughlin, manager of Seattle's First and Walker Starbucks location.

"Our hot and cold bars are properly sequenced, with cold bars not gaining as much popularity, to ensure a consistent experience for customers. We're making them in the order they come in," McGlaughlin stated, noting that the cafe is busier but customers are getting their drinks faster, both in-store and through the drive-thru.

The Digital Production Manager, an iPad system that controls the sequencing of orders in various channels from cafes, mobile orders, and the drive-thru, will give baristas more control over the company's operations. Workers will have more flexibility over changing order priority.

Starbucks app expands

The Siren training rollout was accelerated by the app changes, according to Young. She believes stores will be prepared for increased traffic.

Third-party platforms will also offer mobile order and pay to increase customer reach.

For years, baristas have raised concerns about staffing and scheduling, which has become a top priority issue for union-represented workers, as evidenced by internal surveys and bargaining committee meetings.

Starbucks has made considerable advancements in staffing and scheduling over the past two years, according to the company.

BTIG's Saleh said the company has moved uncharacteristically slowly.

""Howard Schultz first unveiled the Siren System at Starbucks' investor day in 2022, and the company's history of quick action was evident as they swiftly rolled it out," said Saleh."

Starbucks has reported that the implementation of the Siren Craft System in its stores has led to a significant increase in the number of customers served during peak hours, resulting in an estimated 1 percentage point increase in comparable sales annually.

""We are confident in our staffing system and the precision it brings, but no system or internal efforts can predict the unexpected visit of a group of high school kids at 2 p.m., when we typically see less business," Young stated."

The rollout of new equipment under the Siren moniker will involve additional store changes, with a custom ice dispenser, milk-dispensing system, and faster blenders to streamline the process for baristas and get drinks to customers faster. The investment in new equipment will take multiple years, according to Young. She stated that the updated equipment, combined with new training processes, has resulted in a meaningful return on investment. By the end of the year, ten percent of stores will have the Siren equipment.

Starbucks aims to make customers feel that wait times are well-managed and that everyone is in a positive mood, even during busy periods.