It seems that not as many people are willing to wait in line these days for their Starbucks drink.
The coffee chain disclosed lower-than-expected sales growth on Thursday, Jan. 26, with part of the blame pinned on congestion inside stores that push some customers to leave without a purchase.
Starbucks’ mobile order-and-pay, too, was introduced to help make buying a breeze, but it has led to bottlenecks and big, intimidating crowds waiting for orders placed on their smartphone.
This matter has “created anxiety” among certain customers, revealed CEO Howard Schultz, who vacates his post this April to serve as executive chair. On a conference call, however, he said it’s a “great problem” to have and something they know how to solve.
Sad Days For Frappuccino
In a Reuters interview, chief operating officer Kevin Johnson said disappointing American sales mainly stemmed from operational issues caused by congestion at drink pickup sites, following the number of cafes reaping more than 20 percent of mobile order transactions doubling to 1,200 in the fiscal first quarter that ended last Jan. 1.
American region stores open for at least 13 months rose 3 percent for the first quarter, but it missed the average analyst forecast of a 3.9 percent climb, research company Consensus Matrix said. Same-store sales in the United States were also up 3 percent while the number of transactions dropped.
The increase in sales was attributed to higher spending per visit, with more customers ordering stuff like breakfast sandwiches and other food items.
The Seattle-based firm forecast its revenue growth this year at 8 to 10 percent, which is lower than a previous double-digit predicted rise.
Mobile Push
Johnson added that macroeconomic issues that have beset the entire restaurant industry are also partly to blame. Schultz, for years, has also been expecting the retail sector to experience a “seismic” shift as people now shop online more, resulting in less foot traffic inside actual stores.
Analysts foresee that restaurants in general will remain stalled this year, with other big players like McDonald’s still looking for ways to up their sales. In the case of Starbucks, efforts include featuring more food, snacks, and alcohol at night, although plans to add beer and wine to thousands of stores have been effectively scrapped.
On the upside, the coffee chain pointed to positive developments such as the growing number of active U.S. rewards program members to almost 13 million. It aims to boost its incentives by offering customers what they want based on information that Starbucks already knows about them. Through this program, each customer will receive unique offers via email and the Starbucks app.
Mobile technology is changing the game for many restaurants, including McDonald's which, despite being the world’s most popular fast food chain, has been quite slow in adapting to new technology. Word has it that McDonald's will let its customers order items off the menu through its smartphone app, and that customers will also be able to pay for the order within the app for easier, faster transactions.
