Starbucks plans to add more staff to its stores in the coming months after finding that replacing labor with automotive technology negatively impacted customer experience, the CEO of the coffee giant told investors on Tuesday.
Brian Niccol, who became Starbucks’ CEO in September, has been focused on bringing back the customer experience, from improving barista-to-customer connection to simplifying the menu.
“Over the last couple of years, we’ve actually been moving labor from the stores, I think, with the hope that equipment could offset the removal of the labor. What we’re finding is that that wasn’t an accurate assumption of what played out,” Niccol said.
Niccol emphasized a focus on “small details” and “hospitality,” such as bringing back handwritten notes on cups, using ceramic mugs for customers who choose to sit in and increasing seating in stores.
“The equipment doesn’t solve the customer experience that we need to provide, but rather staffing the stores and deploying the technology behind it, does,” Niccol added.
Since 2022, Starbucks has been rolling out its Siren system – a set of technologies that are intended to reduce drink-making times. Niccol said they were going to slow down that rollout to focus on the customer experience, which he believes will help drive growth.
The changes are occurring as coffee drinkers are anticipating higher costs due to President Donald Trump’s tariffs. On Tuesday’s call, Cathy Smith, the CFO, said the company gets its coffee from 28 countries – mostly located in Latin America.
She said the company was looking to “diversify” and “redirect coffee shipments,” but sought to calm investor fears by reminding them that coffee only comprises 15 percent of Starbucks’ product and distribution costs.
Overall, the company’s profit in the quarter was “disappointing,” Niccol said. North American store sales fell 1 percent in the quarter – which was worse than anticipated. However, global revenues rose 2.3 percent compared to last year.
Niccol warned investors that hiring more staff would cost more as well.
As a result, Starbucks’ stock shares plummeted on Tuesday. The stock closed more than five percent down on Wednesday as well.
But investors are still banking on the CEO’s plan to improve customer experience and decrease coffee wait times in the hopes of steering the company to success.
