Starbucks Corp. has been facing some challenges lately, with disappointing quarterly earnings and a gloomy annual forecast. In response, former CEO Howard Schultz has called for the coffee chain to overhaul its customer experience and focus on improving its U.S. operations.
Schultz, who served as CEO for three stretches, said that Starbucks needs to "maniacally focus" on the customer experience and that the answer does not lie in data, but in the stores.
He noted that every company suffers earnings disappointments, but "It's not the miss that matters. It's what comes next. What's the diagnosis of the problem? What's the impact on morale? And what's the strategy to fix it?"
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- Starbucks' comparable-store sales have been sinking, and foot traffic has been declining, particularly in the U.S.
- The company also slashed its revenue and profit outlook for the year, sending its shares down by double digits.
- Starbucks' mobile ordering and payment platform has been a source of frustration for customers.
Schultz said that Starbucks executives need to spend more time with those who wear the green apron and that their top priority should be reinventing the mobile ordering and payment platform.
"The go-to-market strategy needs to be overhauled and elevated with coffee-forward innovation that inspires partners and creates differentiation in the marketplace, reinforcing the company's premium position," he said. "Through it all, focus on being experiential, not transactional."
Schultz led Starbucks from 1987 to 2000, again from 2008 to 2017, and for a final brief stretch from 2022 to early 2023. He's since given up his board seat and has no formal role with the company.
Starbucks shares have sunk 17% over the past five trading sessions and are down 24% year to date, compared to the S&P 500's fractional gain over the past five days and 7.5% gain this year.
Starbucks' Customer Experience Woes
Starbucks has been facing a number of challenges in recent years, including:
- Increased competition from other coffee chains, such as Dunkin' Donuts and McDonald's
- The rise of at-home coffee brewing
- Changing consumer preferences
These challenges have led to a decline in Starbucks' comparable-store sales and foot traffic, particularly in the U.S.
In addition, Starbucks has been criticized for its mobile ordering and payment platform, which has been a source of frustration for customers.
A recent study by the American Customer Satisfaction Index found that Starbucks' customer satisfaction score has declined in recent years.
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| Year | Score |
|---|---|
| 2015 | 79 |
| 2016 | 78 |
| 2017 | 77 |
| 2018 | 76 |
| 2019 | 75 |
Starbucks has acknowledged its customer experience challenges and has taken steps to address them.
In 2018, the company launched a new rewards program designed to improve customer loyalty.
In 2019, the company announced plans to invest $1 billion in its stores to improve the customer experience.
It remains to be seen whether these efforts will be enough to turn around Starbucks' customer experience woes.
Starbucks' Path Forward
Starbucks needs to take a number of steps to improve its customer experience and regain its footing in the coffee market.
First, the company needs to focus on improving the quality of its coffee.
Second, Starbucks needs to improve its mobile ordering and payment platform.
Third, the company needs to invest in its stores to create a more inviting and comfortable atmosphere.
Fourth, Starbucks needs to improve its customer service.
Fifth, the company needs to develop new products and flavors to keep customers interested.
By taking these steps, Starbucks can improve its customer experience and regain its position as the leading coffee chain in the world.
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- Starbucks needs to focus on improving the quality of its coffee. This means using better beans, roasting them more carefully, and brewing them more consistently.
- Starbucks needs to improve its mobile ordering and payment platform. This means making it easier for customers to order and pay for their coffee, and ensuring that their orders are correct and delivered on time.
- Starbucks needs to invest in its stores to create a more inviting and comfortable atmosphere. This means making the stores more spacious, adding more seating, and improving the lighting.
- Starbucks needs to improve its customer service. This means training employees to be more friendly and helpful, and ensuring that they are responsive to customer needs.
- Starbucks needs to develop new products and flavors to keep customers interested. This means coming up with new coffee drinks, pastries, and other food items that appeal to a wide range of customers.
By taking these steps, Starbucks can improve its customer experience and regain its position as the leading coffee chain in the world.
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