Posted on 05/03/2024 7:03:36 AM PDT by Red Badger
A morning rush is nothing new for a coffee shop, especially not Starbucks. However, the global coffee chain recently found that its struggle to keep up with demand is leading some customers to second-guess purchasing their morning coffee.
Starbucks just announced its financial earnings for the second quarter of 2024. Overall, its leadership was upfront in saying that the second quarter of 2024 was not a successful one for the business as a whole. The chain’s U.S. same-store sales declined 3%, and sales outside of North America decreased 6%.
“Let me be clear,” Starbucks CEO Laxman Narasimhan said on the company’s most recent earnings call. “Our performance this quarter was disappointing and did not meet expectations … these results do not reflect our strengths, our capabilities, or the opportunities ahead.”
Where Starbucks saw some positive points was in its mobile transactions and loyalty program. Narasimhan noted on the call that loyalty program members ordering through the Starbucks app account for more than 60% of the chain’s morning business. However, within that silver lining there is still money being left on the table, as the brand noticed many mobile customers deciding not to actually place their orders after adding them to their cart.
“We saw a mid-teens percent order incompletion rate within the order channel this past quarter,” the CEO said. “In other words, customers using Mobile Order-Pay put items into their carts and sometimes chose not to complete the order, citing long wait times and product unavailability.”
Narasimhan used the example of Starbucks’ Potato, Cheddar & Chive Bakes to illustrate the company’s failure to meet demand. The CEO said the bakes were popular among customers, but Starbucks is currently only able to offer them in 2,000 of its U.S. stores.
How Starbucks is going to win back mobile customers
Although the chain’s Q2 performance did not paint a very pretty picture to its investors, Starbucks’ CEO also presented a plan of action alongside the disappointing sales numbers. To remedy the lack of product availability, Starbucks is investing more into its supply chain and focusing on stocking more of its customer base’s favorite items.
The coffee chain is also rolling out new equipment and making updates to its mobile app frequently. Narasimhan explained these changes are meant to reduce wait times and create more transparency with customers so that they can get a better idea of exactly when their order will be ready.
Starbucks also wants to capture the attention of the less loyal “occasional customers,” who are not signed up for its loyalty program. It plans to do this by offering mobile ordering and pay capabilities to non-loyalty program members starting in July. For now, it looks like Starbucks and its investors will have to wait until next quarter to find out if these changes are enough to win over the caffeine connoisseurs of the early morning.
Perhaps it IS beginning...
Just think how much longer those wait times would be if those baristas weren’t making $15.00 to $20.00 per hour. /S
Why not brew coffee at home for a tenth of the price and pour it into an insulated cup that keeps it warm for a half hour and take it with you. Then take the over $1,000/year saved and treat yourself to something.
Article never clearly explains what “this” is. Stupid writing.
Not Starbucks, it’s Sevenbucks.
Die, Starsucks, die. I never want to see that stupid hippy logo again.
We have Starbuckses around here, but Dutch Bros seems to get most of the traffic.
We’ve always done so but since inflation hit have gone back to Maxwell House and Folger’s instead of locally roasted whole beans. (The struggle is real ;-)
Checked my Starbucks app yesterday, wanted to check their prices - there were no prices anywhere on the menu - only when you went to check out could you see the price of your drink. This is being done on purpose b/c when you see how much prices have gone up for Starbucks coffee, you won’t order - why Starbucks said the orders were not being placed at the end.
The latte I used to order in another life is now almost $7.00 - plain, grande latte (California so high prices all over).
Glad I switched to making coffee at home - along with being far cheaper, it is far better quality.
Good idea.
Trouble in Latte Land?...............
At “Ross” I got a couple of insulated mugs that keep my coffee hot for hours. They were only ten bucks.
““We saw a mid-teens percent order incompletion rate within the order channel this past quarter,” the CEO said. “In other words, customers using Mobile Order-Pay put items into their carts and sometimes chose not to complete the order, citing long wait times and product unavailability.”..............
People are LAZY.
Ditto...home roasting rocks. Hot coffee, ice coffee, cold brew...all right at home.
perhaps the would-be customers comprehend that $7.50 for a cup of coffee is a rip-off?
you think the average Star*ucker has the gray cells to realize this?
it takes at least 2 gray cells...
LOL, no not at all. I received a Nespresso for my birthday two years ago -the pods are around $1.25 each - came with a milk frother too. The lattes I make at home are FAR better quality than Starbucks, plus I also got an insulated mug as a gift.
Haven’t looked back...
If you buy a high end cappuchino/latte machine at home, you can have it paid for within 6 months by the money you save by not buying starbucks.
“Article never clearly explains what “this” is. Stupid writing.”
The article was written and then the author had to figure out how to make you click on it. It’s similar to the issue of using an app but not going through with it. The two technologies are not compatible. The writer wrote an article suitable for a print magazine, but then had to convert it to cyberspace. The Starbucks app is way more efficient than their brick-and-mortar store can handle. Everybody wants me to download their app. The problem is those apps generate a potential entry point for malware and it’s obvious they can’t all be suitably protected as they are mostly rush not-ready-for-prime-time applications with horrible bugs.
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