Tech Check is a regular column on restaurant technology by Senior Editor Joe Guszkowski. It's also a newsletter.
Almost every restaurant with a mobile app probably has Starbucks to thank.
The coffee giant that introduced quality java to the masses and popularized the concept of the “third place” also happens to be responsible for mainstreaming mobile ordering. Its smartphone app, launched in 2015, was not the first of its kind, but it became perhaps the most influential, allowing customers to skip the wait for their (customizable) morning coffee and earn loyalty points while doing so.
Today, virtually every large restaurant chain offers mobile ordering, and many are working to push more business to that channel. It’s not an exaggeration to say that mobile will eventually be the dominant restaurant ordering mode, at least in limited service.
That’s why every restaurant should be watching what Starbucks does under new CEO Brian Niccol, who has identified mobile ordering as one of the chain’s biggest problems.
In an open letter this week to customers and employees, Niccol acknowledged that the influx of mobile orders has hurt the vibe of the chain’s stores. What was once a cherished daily ritual has frequently become a transactional and chaotic experience. And business has suffered as a result: Starbucks last quarter posted a rare same-store sales decline of 3%.
Niccol is not alone in his assessment. On a podcast last month, Howard Schultz, Starbucks’ former CEO and the architect of its third place philosophy, laid much of the blame on the mobile app, which he called the brand’s “biggest Achilles heel.”
“The mobile app created unbelievable convenience for our customers,” he told the hosts of Acquired. “But remember, we are an experiential brand. … It was beginning to deteriorate, at a rapid rate, the third place experience and the sense of community.”
He went on to describe a scene that any recent Starbucks visitor will recognize: a “mosh pit” of online customers crowding the counter as they anxiously await their order. “That’s not Starbucks,” Schultz said.
A recent visit to my local branch illustrated some of the negatives. I was able to order in-person with ease when I arrived at around 8:30 a.m., and was pleasantly surprised to find that I was one of several customers who chose to dine in. “Maybe things aren’t so bad after all,” I thought.
But within an hour, a crowd had formed around the pickup area. A customer started shouting at an employee. Someone called the police. The staff was extremely professional through it all. But it was not the cozy cafe Starbucks aspires to be.
To be sure, Starbucks’ mobile ordering issues are somewhat unique to Starbucks. A lot (about 31%) of its orders come through the app. Many of them hit during the morning rush, when people are in a hurry and desperate for their daily dose of caffeine. And Starbucks is struggling at the moment, which has put its operations under a microscope.
But that doesn’t mean that other brands should ignore what’s happening there. The growth of digital ordering raises deep questions for any restaurant that cares about hospitality. How does an operator provide a good experience to a customer who may never even set foot in the restaurant, while also maintaining a level of service for those who do choose to sit down and stay awhile?
That is precisely the question Niccol will attempt to answer at Starbucks. In his letter, he said the company will improve its app and ordering system while also investing in the in-store experience, all with the goal of “reestablishing Starbucks as the community coffeehouse.”
Put simply, he wants to go back while moving forward. That’s not just a balancing act, it’s a physics problem, and on a massive scale: Starbucks has nearly 39,500 restaurants worldwide and is the second-largest chain in the U.S. by sales.
But if anyone can figure it out, it’s Niccol, who is coming off a miraculous turnaround at Chipotle, and Starbucks, which has a history of breaking new ground. It was the first nationwide coffee brand, arguably the first “experiential” restaurant chain and one of the first to go digital. Under Niccol, it will attempt to synthesize that DNA into something both familiar and new. Everyone else should be taking notes.