Is Starbucks’ Is the mobile app the company’s biggest weakness?
Former CEO Howard Schultz said this in a recent podcast appearance. And it’s something new, CEO Brian Niccol will probably be the first to tackle if he takes the helm at the coffee chain next month, CNBC reported Sunday (18 August).
According to this report, both investors and executives have blamed operational issues for the company’s declining sales. Schultz said on the “Acquired” podcast earlier this summer that the mobile app was a problem, calling it “Starbucks’ biggest Achilles heel.”
CNBC points out that mobile orders account for about a third of the company’s revenue and tend to be more complicated. While add-ins like foam and syrup help with profits, they also take up baristas’ time, causing frustration on both sides of the counter.
“I agree with Howard Schultz,” Robert Byrne, senior director of consumer research at Technomic, a restaurant research firm, told CNBC. “It’s not in the data – it’s in the store. That’s the problem.”
CEO leaving at the end of April Laxman Narasimhan said the company is struggling to meet morning demand — and is driving away customers with long wait times. And Schultz said during his appearance on Acquired that he experienced the problem himself at a Starbucks in Chicago.
“Everyone comes and suddenly we have a mosh pit, and that’s not Starbucks,” he said.
Starbucks announced the appointment of Niccol last week. He joins Starbucks after six years as CEO of Chipotle and shortly after a Mixed results report for the coffee giant, which reported a 3% decline in global comparable store sales, driven by a 5% decline in transactions despite a 2% increase in average receipt size.
“We operate in a demanding consumer environment. The impact of this is seen in out-of-home consumption,” Narasimhan said in a conference call.
PYMNTS wrote last week that industry analysts positive in their assessment of Starbucks’ hiring of Niccol, who was also CEO of Taco Bell from 2015 to 2018.
“It is surprising, but he could be the Perfect adaptation to the organization,” said Greg Zakowicz, senior e-commerce expert at Omnisend. “He has an impressive background, particularly in the grocery industry where products are not essential, and has successfully led companies like this one during difficult economic times.
“Given the steady increase in consumers who are going without food, I don’t think this should be underestimated,” he added. “He knows how to appeal to consumers at a time when their The wallets are tight. This is something Starbucks desperately needs.”
