Brewing up a post-COVID customer experience at Starbucks

Profile picture for user slauchlan By Stuart Lauchlan July 28, 2021 Audio mode
Summary:
Customers have flocked back to the Starbucks sofas as the Vaccine Economy warms up.

starbucks

For many people an indicator of some kind of return to normality was always going to be the ability to sit down in a coffee shop for a mug of java. While Starbucks rode out the worst of the COVID crisis as a result of having a well-established, digitally-enabled off site operation in place, the firm’s just turned in record third quarter numbers that suggest customers have been waiting for the chance to get back on the in-store sofas.

Revenue soared 78% year-on-year to $7.5 billion for the April-June period, with same-store sales up 83% in the US, while profit came in at $1.15 billion. CEO Kevin Johnson pointed to what he called “the great human reconnection” in action:

As we celebrate Starbucks’ 50th anniversary, we are reminded of the increasing premium on genuine human connection, which has always been at the heart of Starbucks. If there is any lesson we can take from this past year, it is that our promise to uplift every day through authentic human connections over coffee is enduring. It has never been more valuable and sought after. As humans, we belong together and Starbucks was built for this moment.

Now, with customer mobility increasing, we are at the beginning of what we describe as the great human reconnection. The reopening of markets is translating to incredible increases in demand for Starbucks as people are again on the go, reconnecting and socializing with one another. 

He added:

 Extending the in-store experience with digital customer relationships continues to extend our reach, deepen engagement and enhance the customer experience, further differentiating Starbucks and offering customers ever-increasing choice as to how they engage with the brand. We again added over 1 million new active Starbucks Rewards members in the quarter, with over 24 million active members now representing 51% of all spend in our US stores and up 8 percentage points over pre-pandemic levels, our ability to engage has never been higher.

More and more of these customers are embracing experiences that effortlessly fit their lifestyle with drive-thru representing 47% of transactions and mobile ordering for in-store pickup delivery or curbside at 26% of transactions. We are leveraging all channels to better serve our customers.

Boosting the customer experience

As the Vaccine Economy takes shape, there are still changes underway around the post-COVID customer experience, said John Culver, Starbucks Group President, International Channel Development and Global Coffee, Tea & Cocoa:

One of the big things to note is that we have returned to pre-pandemic levels in terms of our overall operating efficiencies within our stores…We significantly upgraded our play builder program, which allows us to be more effective in how we deploy our labor. We’ve also made good investments, strong investments in customer service training. If you look at it over the last 18 months or so, since COVID has hit, about 70%, roughly 70% of our partners have been hired in these last 18 months and they’ve been operating in this COVID restricted environment. So we are reinvesting now in the customer service training for our partners, as customers become more mobile and frequent in our stores.

There’s also new automation kicking in in the shape of automated inventory ordering, he added:

This is a system that we have been testing. We just recently expanded the test. We are now rolling it out at 1,500 stores this past week. It basically removes the inventory task from our store partners and allows them to focus on their customers and the customer experience. And we expect that this will be fully rolled out in all company-operated stores for food and merchandize items by the end of the calendar year.

Finally, while in-store engagement has bounced back, drive-thru is likely to remain an enhanced part of the overall Starbucks experience moving forward, he said:

Focusing on decreasing the out the window times for the drive-thru experience, we introduced new equipment and technology with handheld order points to target to improve the speed of service. We’ve also introduced tech improvements to make the orders more easily managed through consolidation and hand-offs and we are going through and renovating about 150 constrained drive-thru stores to design a new engine, removing pace your cases or repositioning it and really dedicating the POS (Point of Sale) system to that drive-thru location.

And then we are not stopping there. We are continuing to innovate around when is the next evolution of the drive-thru store for our customers. So, lot of great work by the teams, broadly across the operations, store development, supply chain, and the technology team.

My take

I’ll drink to that. A remarkable boost as Starbucks enters its second half century.