To fix Starbucks, incoming CEO Brian Niccol will have to tackle its mobile app problem
It's become a familiar sight at Starbucks cafes: a counter crowded with mobile orders, frustrated customers waiting for the drinks they ordered and overwhelmed baristas trying to keep up with it all.
Fixing that problem will likely top incoming CEO Brian Niccol's list of tasks to turn around the struggling coffee giant when he steps into the role on Sept. 9.
Investors and executives alike have pointed to operational issues as one reason the chain's sales have lagged in recent quarters. Other culprits for its recent same-store sales declines include a weakening consumer, boycotts and the deterioration of the Starbucks brand.
Former CEO Howard Schultz, who lacks a formal role with the company but remains involved, has also pointed the finger at the mobile app. He said it has become "the biggest Achilles heel for Starbucks," on an episode of the "Acquired" podcast in June.
Mobile orders account for roughly one-third of Starbucks' total sales, and tend to be more complicated. While add-ons like cold foam or syrups are more profitable for Starbucks, they tend to take up more of baristas' time, frustrating both them and customers.
"I agree with Howard Schultz," said Robert Byrne, senior director of consumer research for Technomic, a restaurant market research firm. "This is not in the data — this is in the store. This is where the issue lies."
In late April, the current CEO Laxman Narasimhan said the company was struggling to meet demand in the morning — and scaring away some customers with long wait times.
Schultz said he experienced the problem himself when he visited a Chicago location at 8 a.m.
"Everyone shows up, and all of a sudden we got a mosh pit, and that's not Starbucks," Schultz said on the "Acquired" episode.
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