How Starbucks is shifting its model to become more high-tech without losing touch
It’s no secret that Starbucks has built one of the strongest customer-centric brands in the world. Across 32,000 stores and 80 countries worldwide, the international coffeehouse is always within reach for a mid-day pick-me-up, to catch up with a friend, or take advantage of free Wi-Fi and people-watching. The brand prides itself not on being a coffee company serving people, but a people company serving coffee—and has grown a dedicated following of customers because of it. For decades now, Starbucks has delivered remarkable growth and has become a leader in innovation in the market.
But the last few years have tested Starbucks and the food and restaurant industry at large. The world of QSR has changed in profound ways, putting unique pressures on brands to adapt to the digital demands of their customers. With a surge in new customer channels and propositions, such as marketplace delivery partners, click and collect, and coffee subscriptions, Starbucks has had to radically transform its store operations to continue providing the fast and high-quality service its customers have come to expect.
How is Starbucks shifting to meet those needs and continue a pace of double-digit revenue growth post-pandemic? It starts with the brand’s unique approach to technology, employee management, customer care, and where the three meet.
A high-tech vs. high-touch experience—which is better?
The debate over “high-tech” versus “high-touch” is a longstanding battle that has become more prevalent since the onset of the pandemic. New technology is revolutionizing the ways we interact with each other and simplifying the process. However, the more technology and data-driven organizations become, the more their success depends on the people involved. A classic high-touch model is a business characterized by a close customer relationship. So, what’s the trade-off between high-tech and high-touch? Starbucks teaches us there doesn’t have to be one.
Starbucks as the “third place” for people
Starbucks’ origin story starts with a high-touch model. Inspired by his observations in Milan in the 1980s, Howard Shultz defined the ambition for Starbucks to be “third place” that people go outside their homes and workspaces. Not just for a cup of coffee and free Wi-Fi, but somewhere warm and inviting where patrons can make connections and that has delicious products to sell. Baristas make custom drinks in front of customers that take a couple of minutes to produce, rather than an instant pour—allowing them to wow customers and charge higher prices. And the longer a customer stays, the more likely they will buy other items like snacks, sandwiches, cold drinks—or another specialty coffee-based drink.
Covid-19 challenges the traditional high-touch model
Covid-19 had a real impact on restaurants and in-person businesses that’s been well documented elsewhere. The pandemic challenged Starbucks’ model, which traditionally relied on customers spending extended periods of time inside a physical location. It created a need for more high-tech experiences, often with much less interaction. Furthermore, consumer preferences have evolved—gone are the days where what most people ordered were espressos, cappuccinos, or lattes. Today, three in four drinks that Starbucks makes are cold rather than hot, with the company often referred to as “Frappuccino” factory. With this shift, the complexity of operations has significantly increased.
The Tryer Center, Starbucks’s state-of-the-art innovation center, was tasked with helping the organization pivot their model to adapt to the new needs of the customer. This is where we, along with our partners from PA Consulting, joined the discussion to offer our expert opinion on how the brand could build a dashboard that measures the complexity of operations and offer a solution.
Designing a store complexity model with human-centered design
What Starbucks really needed was a model to measure the complexity of its store’s primary activities and tasks, to simplify operations, while preserving the sense of ownership and mastery by its employees (or “partners” as Starbucks famously refers to them). The goal is to enable the barista to make Iced Brown Sugar Oat-Milk Shaken Espressos as efficiently as possible, while honing their own craft and having them feel full ownership of the activity. So, we proposed just that—a model that allows Starbucks to measure task simplicity and partner engagement, at the task level, for each store type. A happy partner, that produces drinks as efficiently as possible, results in a happy customer that feels both connected and satisfied.
Let’s explore this further.
Step 1: Strengthen partner engagement
Partner engagement is critical to Starbucks’ ability to break through the high-tech and high-touch frontier. Baristas like to work at Starbucks because they can curate specialty drinks and practice mastery. However, operations can suffer when baristas are stuck doing low-satisfaction, time-consuming tasks, like mopping and vacuuming.
To measure engagement, we suggested that Starbucks analyze partner activities to determine which tasks are dragging down the bottom line. A map can be made on how partners feel throughout the day by segmenting them into categories of job fulfillment and understanding the impact of workflow complexity on cognitive load, teamwork, and drivers of job satisfaction. By developing a robust research approach to understand task complexity and partner sentiment, it can be recommended that tasks, such as cleaning and organizing, be automated to maintain high partner satisfaction. This requires getting into the mindset of partners to understand their underlying beliefs and motivations.
Step 2: Improve productivity and revenue growth
The once ‘selling factor’ of watching the barista make your coffee became a hindrance when the pandemic made customer interaction nearly obsolete. Customers wanted their drinks faster than ever, and baristas couldn’t keep up.
Productivity has a direct correlation to profitability and how a brand is perceived. With this in mind, amidst a mass labor shortage, Starbucks sought to discover what non-production tasks they could automate and outsource to decrease time and labor and increase productivity and revenue.
The introduction of a new cappuccino machine took away the complexity of making more elaborate, multi-step drinks without sacrificing the quality. Starbucks introduced this automation to simplify processes without disrupting the barista’s mastery to keep the barista happy and serve more customers. Reducing complexity, while preserving the partner’s sense of mastery, does indeed translate into value to the organization.
Step 3: Deliver a more satisfying customer experience
Starbucks is constantly innovating to create a more satisfying customer experience. In recent years, the brand has done this through opening six global Starbucks Reserve Roasteries, which have become popular tourist attractions.
The Roasteries offer something new—an immersive coffee experience that satisfies more than just one need. Customers can spend hours learning about the brand’s history and evolution, shopping various products, and tasting tailored menus featuring unique beverages in each location. If implemented, our research and framework would set a foundation for Starbucks to get an understanding of how customer experience and interactions vary based on store location and what the drivers of customer delight are for each specific consumer segment.
The complexity model can also help with a design of the Store of the Future
Through human-centered workflow redesign, brands like Starbucks can strengthen partner engagement, deliver more satisfying customer experiences, and improve productivity and revenue growth. The complexity model connects to long-term strategy, helps unleash growth, and enables leaders to make better-informed business decisions.
“The T&Co team took the time to understand our needs and worked along-side our team to frame and tackle this really important challenge,” said Leon Hovanessian, Director in the Tryer center and Complexity Model Project Manager. “Their ability to deconstruct a problem and facilitate a strategic dialogue helped us get clarity on the direction to pursue.”
Our approach to human-centered workflow redesign at T&Co balances the needs of the individual, the team, the customer, and the company. It employs innovative techniques for brands looking to create the right balance between higher-tech and higher-touch experience—in Starbucks’ case, it supports the design of the ‘Store of the Future’.
If you have any questions about our discussion with Starbucks or want to learn more about our method, please reach out to Francesco Fazio at [email protected]