Company's biggest strengths is becoming a huge problem for the chain

pulse

January 27, 2017 5:27 PM

Starbucks customers have increasingly found themselves crowded around the pick-up counter, wondering if a barista will ever call their name.

null

Walking into a Starbucks recently, you may have noticed a frustrating change.

In Starbucks' ideal world, people craving coffee would pull out their smartphones and order a latte on the chain's app a few minutes before arriving at the coffee shop. Then, they would walk into the closest Starbucks and find — voilà! — a barista calling out their name, drink in hand. The customer would grab the coffee and leave, with the entire process taking mere seconds of their time.

Recently, that simply hasn't been happening.

Starbucks customers have increasingly found themselves crowded around the pick-up counter, wondering if a barista will ever call their name. Some people have even started walking into Starbucks, taken a look at the crowd waiting for their drinks, and immediately exited, executives said in the company's call with analysts on Thursday.

That's because when customers order on their smartphones, during busy times of day, these orders are all immediately dumped on baristas. Then, when the hoard of customers show up to pick up their drinks at the exact same time, it creates bottlenecks and scares walk-in customers from even attempting to order.

Starbucks' digital ordering platform has been one of the company's crown jewels in recent years. Mobile order and pay accounted for 7% of US orders in the last quarter, up from 3% in the prior year, the company reported Thursday. In the US, customers now pay for more than one in four Starbucks orders using a mobile device.

However, the growth of mobile ordering is now also having a measurable, negative impact on sales at the chain. Starbucks reported that transactions, a measure of customer traffic, dropped 2% in the most recent quarter, in large part due to problems caused by mobile ordering.

The company's shares fell more than 4% on Friday morning.

Starbucks is now scrambling to find a solution.

"I'm not really worried. I know that the market has over-reacted," CEO Howard Schultz said on CNBC on Friday, repeatedly promising that Starbucks would solve the issue.

While Schultz did not provide concrete details on what this solution would be, other executives have hinted at potential fixes.

Reuters reported the chain has begun adding one or two more baristas focused on mobile ordering and payment at certain especially busy locations during peak hours. Other solutions being considered reportedly include new work routines and testing text notifications to alert customers when orders are ready.

pulse