The coffee giant has long maintained that mobile order and pay are crucial to its future.
“Almost all of our same-store sales growth [is] from those customers that we have digital relationships with and those that are in our Starbucks Rewards program,” Starbucks CFO Scott Maw said at a JPMorgan forum on Friday.
However, Maw said that Starbucks has struggled in this crucial area. In January 2017, Starbucks reported that transactions — an important measure of customer traffic — had dropped 2% in the most recent quarter, in part because of problems caused by mobile ordering.
In March 2017, orders that were supposed to take two to five minutes at a high-traffic location in Manhattan often took more than 10 minutes.
Customers were angry that they were forced to wait, and they complained on social media. Some even walked out without ordering or picking up their drinks, which had a noticeable impact on sales.
Over the last year, the chain has made a number of changes to its mobile ordering process.
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Last spring, the chain rolled out pick-up shelves for mobile orders so that baristas wouldn’t have to waste time repeatedly calling out absent customers’ names. The app also now alerts customers when their order is ready.
Employees’ roles shifted, with certain workers assigned exclusively to mobile-related tasks — such as handing off drinks — during busy hours.
The most recent change took place in late February.
“About three weeks ago, we rolled out a national update … what we call Deployment 2.0, which is a terribly boring name,” Maw said.
Deployment 2.0 is Starbucks‘ first national effort in roughly five years to determine how many employees should be working at different times of day, and what exactly their tasks should be.
Over the last five years, Maw said, the types of orders people are placing has changed, with more cold drinks and food in addition to traditional espresso-based beverages. However, employees’ assigned tasks hadn’t changed until now.
“We think we are on to something,” Maw said. “We think we are off to a good start. And, even if the partners [Starbucks’ term for employees] are just happy and nothing else happens, it’s going to be a good thing.”
The combined force of the changes is having a noticeable impact on the mobile-ordering experience. Business Insider visited Starbucks locations in New York City every day for a week in March, soon after Deployment 2.0 rolled out, though we were unaware of the new initiative at the time.
We were shocked by how much the speed and experience seemed to have improved.
While Starbucks was still hit-or-miss in August 2017, the last time we last recorded mobile wait times, almost every single order took less than five minutes this time around. Typically, our drink was ready when we showed up to the mobile pick-up area, roughly two minutes after placing the order. Even ordering food didn’t significantly slow things down.
The only time an order took over five minutes was when we ordered a hot and cold beverage. Still, that took just over six minutes — nothing close to the 10-plus-minute wait times that we routinely faced last year.
On social media, anger against Starbucks’ mobile ordering and payment system seems to have transitioned into celebration of efficiency — and laziness.
With most of its sales growth coming from mobile orders, Starbucks realizes that it cannot afford to rest on its laurels when it comes to digital. The chain is still struggling to increase traffic, which has been flat in the US over the past year.
Maw spoke extensively about the opportunities that personalized digital marketing will give Starbucks, as it targets different customers in distinct ways.
The company’s next big digital push will come at the end of March, when Starbucks rolls out mobile order and pay for all users. Currently, only Starbucks Rewards members can order via the app.
However, the chain is certainly not forgetting about its Starbucks Rewards customers. According to Maw, the company hopes to have the group increase how much they’re spending at Starbucks in the mid-single digits every quarter, with double-digit increases in the number of members.