Americans pulling into a Starbucks drive-thru might think they are being served by a friendly staff member. But at some locations, the voice listening to the order is actually an AI robot. Behind the counter inside the store, baristas can lean on a virtual personal assistant to recall recipes or manage schedules. In the back of the shop, a scanning tool has taken on the painstaking process of counting the inventory, relieving staff of one of retail's most tedious chores, in a bid to fix the out-of-stock gaps that have frustrated the firm.
The new technology is part of hundreds of millions of dollars the 55-year-old coffee giant has been investing as it tries to win back customers after several years of struggling sales. And there are signs that the effort is working. Last week, the company reported its first sales increase in two years at established stores in the U.S. – its biggest and most important market, accounting for some 70% of revenue.
Still, the firm's share price slid 5%, reflecting investor concerns that all the spending, which includes $500 million to boost staffing, had hurt profits. Chief Executive Brian Niccol says he is confident that consistent sales growth will ultimately address that problem. But with the company promising to find $2 billion in cost savings over the next three years, investments in technology are crucial to ensuring that improved sales also yield better profits.
Niccol joined the company in 2024, at a time when the business was under pressure. Customers were balking after a string of price increases, and the brand faced boycotts tied to unionized barista disputes over pay and benefits. He declared a halt to price increases, simplified the menu, and set a target for baristas to complete orders in four minutes or less, while also cutting thousands of corporate roles and closing underperforming stores.
The firm has also started sprucing up shops with inviting armchairs, new paint, and ceramic mugs as part of improvements aimed at enhancing customer experience. These updates are part of a $150,000-per-store uplift expected to take four years to complete. However, this push towards deploying AI comes amidst ongoing union campaigns, raising questions about the company's balance between technology use and personal customer relations.
At the firm’s recent investor day, Niccol outlined ambitious expansion plans, particularly overseas, where it hopes to nearly double its footprint to almost 40,000 stores in the years ahead. Despite lingering financial concerns, he expressed optimism fueled by a receding general inflation trend and the recent removal of tariffs on coffee, which had previously escalated costs.
The new technology is part of hundreds of millions of dollars the 55-year-old coffee giant has been investing as it tries to win back customers after several years of struggling sales. And there are signs that the effort is working. Last week, the company reported its first sales increase in two years at established stores in the U.S. – its biggest and most important market, accounting for some 70% of revenue.
Still, the firm's share price slid 5%, reflecting investor concerns that all the spending, which includes $500 million to boost staffing, had hurt profits. Chief Executive Brian Niccol says he is confident that consistent sales growth will ultimately address that problem. But with the company promising to find $2 billion in cost savings over the next three years, investments in technology are crucial to ensuring that improved sales also yield better profits.
Niccol joined the company in 2024, at a time when the business was under pressure. Customers were balking after a string of price increases, and the brand faced boycotts tied to unionized barista disputes over pay and benefits. He declared a halt to price increases, simplified the menu, and set a target for baristas to complete orders in four minutes or less, while also cutting thousands of corporate roles and closing underperforming stores.
The firm has also started sprucing up shops with inviting armchairs, new paint, and ceramic mugs as part of improvements aimed at enhancing customer experience. These updates are part of a $150,000-per-store uplift expected to take four years to complete. However, this push towards deploying AI comes amidst ongoing union campaigns, raising questions about the company's balance between technology use and personal customer relations.
At the firm’s recent investor day, Niccol outlined ambitious expansion plans, particularly overseas, where it hopes to nearly double its footprint to almost 40,000 stores in the years ahead. Despite lingering financial concerns, he expressed optimism fueled by a receding general inflation trend and the recent removal of tariffs on coffee, which had previously escalated costs.
