Brian Niccol will need to address operational issues, with mobile orders being one of the main culprits for the struggling sales of Starbucks. Former CEO Howard Schultz has criticized the mobile app, saying it is the company’s biggest Achilles heel. Mobile orders, which account for roughly one-third of Starbucks’ total sales, can be more complex and time-consuming for baristas, leading to frustrations for both employees and customers. The chain has been struggling to keep up with the high demand in the morning, resulting in long wait times and crowded cafes.
When Schultz built Starbucks, it was positioned as a “third place” between work and home, but the convenience of mobile ordering has shifted consumer behavior away from lingering in cafes. Since Schultz stepped down as CEO in 2017, Starbucks struggled to anticipate the technological adjustments needed to accommodate the growth of digital orders. Shareholders are also concerned about the wait times in stores and mobile orders taking precedence, potentially leading customers to spend less time and money inside the cafes. The pressure on baristas from digital orders has even led to some employees unionizing and pressing for changes in the company’s policies.
In contrast, Niccol’s current employer, Chipotle, has successfully adapted to the rise in digital sales. With 35% of revenue coming from online orders, Chipotle has already implemented measures such as adding a second prep line for digital orders and drive-thru lanes specifically for online pickups. Niccol’s tenure at Chipotle focused on boosting digital sales through various promotions and a rewards program, catering to the needs of online customers. The success of these strategies at Chipotle could potentially be applied to Starbucks to improve efficiency and customer experience.
Starbucks has been making efforts to improve service and baristas’ work experience, with new equipment and processes introduced under Schultz’s leadership and continued by Narasimhan. Initiatives such as showing customers the progress of their orders on the mobile app and implementing the “Siren Craft System” to speed up drink preparation have been rolled out. However, the equipment rollout has been slow, with only 40% of North American locations expected to have the new machines installed by the end of fiscal 2026. Speeding up this process could significantly reduce service times and alleviate the strain on baristas.
Niccol will need to address the mobile order issues more aggressively, potentially requiring more drastic measures to improve efficiency and customer experience at Starbucks. With his experience in boosting digital sales and operational efficiency at Chipotle, Niccol has the credibility to implement changes and explain to investors how they will address the current challenges faced by Starbucks. By focusing on streamlining mobile orders, reducing wait times, and enhancing the in-store experience, Niccol could lead Starbucks toward a successful turnaround and regain its position as a top coffee chain in the market.
