Starbucks Corp. SBUX is accelerating its operational turnaround with CEO Brian Niccol‘s new “Green Apron Service” model, targeting a four-minute custom order completion goal across all U.S. company-operated stores by September.
$500 Million Investment in Service Recovery
The Seattle-based coffee giant is investing over $500 million in additional labor hours over the next year as part of its “Back to Starbucks” strategy. The initiative represents what the company calls its “biggest investment ever in operating standards and customer service,” according to Niccol during the company’s fiscal third-quarter earnings call.
Early pilot results from approximately 1,500 stores show improvements in transactions, sales, and customer service times. The rollout spans roughly 11,000 company-owned locations nationwide.
Smart Queue Technology Addresses Mobile Order Bottlenecks
Starbucks is implementing Smart Queue technology using algorithmic guidance to balance service between mobile orders—which comprise 30% of business—and in-store customers. Chief Operating Officer Mike Grams cited customer frustration with mobile orders being prioritized over café patrons seeking the traditional “third place” experience.
“What we had to figure out is, ‘How do we bring order to the fact that we have three key order points?'” Niccol told WGN News during a Chicago-area store visit.
Analyst Views Mixed on Turnaround Timeline
Wall Street analysts maintain cautious optimism despite the company’s sixth consecutive quarter of same-store sales declines. Piper Sandler‘s Brian Mullan raised his price target to $105 while maintaining an Overweight rating, noting the initiative “has the potential to change the traffic trajectory sooner than expected.”
TD Cowen‘s Andrew Charles maintained a Hold rating with a $95 price target, noting the $500 million investment is “front-end loaded” and lower than previous estimates of $700 million.
Financial Performance Context
The company reported third-quarter revenue of $9.46 billion, beating analyst estimates of $9.29 billion, but adjusted earnings per share of 50 cents fell short of the 65-cent consensus estimate.
Starbucks expects U.S. same-store sales to remain flat in the fourth quarter, below Street expectations of 1.4% growth. Management projects traffic improvements after a 3% decline in the previous quarter.
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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
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