Starbucks’ focus on its in-store service isn’t just about in-store customers. | Photos by Jonathan Maze.
At the Starbucks Investor Day presentation on Thursday, Brian Niccol, the chain’s CEO, explained why the chain’s intense focus on its in-store experience was so important for the brand’s results.
“Over 60% of our customers just in this last month came into our café to order their cup of coffee or their drink, and that doesn’t even include the people that order mobile order pickup that came into the café to get their drink,” Niccol said. “Our cafes are our point of differentiation. It creates the halo that lifts every other coffeehouse order channel.
“If you walk into a place and there’s nobody in the seats or it’s a soulless place, you don’t feel great about what you just ordered. If you walk into a place and the place is vibrant, it’s connected to the community. You feel really different about that cup of coffee.”
Much of the focus of the past 15 months at Starbucks has largely been about that in-store experience.
The company did little things, such as writing on cups and reinstalling self-serve creamer stations. It also did some big things, notably its “Green Apron” service model that enabled store managers to add labor where necessary. It’s also remodeling locations to make them more inviting for the in-store customer.
It has remodeled 200 such locations, mostly on the East and West Coasts, and expects to have 1,000 done by the end of this fiscal year, which ends at the end of September. Even some of the chain’s smallest remodeled locations feature some seats, such as one location in New York that featured a green bench along one wall with small tables evenly spaced and stools on the other side.
On the opposite side of that wall was a fancy new digital menu board with the menu and customers’ order status.
The “halo” effect that Niccol talks about is a real thing. It’s similar to the concept of healthy options on a restaurant menu. Customers like that it’s there even if they have no intent of ordering from it.
Similarly, customers prefer visiting places that look nicer and are more energetic, and they’re far more likely to visit a restaurant if they see that it’s busy.
Starbucks added seats to one of its takeout-only locations in New York City.
Starbucks was created as an in-store café, a place people could hang out all day. “The soul of the brand,” as Starbucks Chief Operating Officer Mike Grams said. He also noted that “every time we put chairs in cafes [they] fill up.”
Yet he also noted that the company’s in-store service reinforces its other access points. “Data shows that our ecosystem of access points reinforce each other,” he said at the presentation. “Customers don’t visit Starbucks for a single moment.”
Customers go into the café for “connection,” he said, “mobile for personalization, drive-thru for on-the-go and delivery for convenience. Different occasions that reinforce one another. Connection and convenience are not trade-offs at Starbucks. We deliver both.”
Some at Starbucks also argue that at least some of the takeout data, at least when it comes to the coffee chain, is a bit overstated. A lot of mobile customers will consume their drink inside the shops.
Starbucks executives this week were able to point to real sales data showing that this strategy is working. Same-store sales rose 4%, with traffic up 3%, and that improved transaction count came from both loyalty and non-loyalty customers.
It’s worth as a reminder that, in the restaurant business, you are who you are.
Trends may change and make life more difficult on restaurant chains. Starbucks’ aggressive shift away from its in-store operations was certainly understandable coming out of a pandemic in which everybody thought we’d be taking our coffees with us from now on.
But customers ultimately returned, which effectively left Starbucks flat-footed and paved the way for at least some of the challenges of the past two years. Fixing that has been a crucial part of the company’s recovery.
