You may ask, what’s technology got to do with coffee, apart from figuring out how to work a coffee machine? Well, a lot. At least in the case of the beverage giant Starbucks.
Even if you have never been to a Starbucks, or think that their coffees are just ludicrously priced, or think it’s way overrated, you have definitely heard of them. Their popularity is to such an extent that the brand name is basically synonymous with coffee.
From a single store in Seattle in 1971 to now having over 30,000 retail stores in 83 markets, Starbucks has grown into a corporation permeating every corner of the world. Even other worlds apparently, as we saw when what looks like a Starbucks cup snuck into a frame on Game of Thrones.
But it’s not just their coffee or its ubiquitous nature that sets Starbucks apart. There is also a lot of technological labor and innovation that goes behind the tailored experience of their coffeehouses.
Starbucks’ first investments into technology began with Howard Schulz, who was CEO till 2017. This focus on technology was made even more obvious when Schulz chose Kevin Johnson to succeed him as CEO, a choice driven by Johnson’s IT expertise and experience.
A lot of the success of Starbucks is owed to its integration of technology and quick adapting to the times. So today, let’s take a look at the technological side of Starbucks.
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Everything that Starbucks does go in sync with its mission- ”to inspire and nurture the human spirit – one person, one cup, and one neighborhood at a time.” They focus on experience rather than just serving beverages. So even- or rather, especially- the technological innovations they use in their corporation grow around this.
Starbucks has this vision of using “AI for humanity”- using AI to give space for human relationships, connections, and communications to grow- of wanting to “flip the script on the paradoxical relationship between humans and technology.” The basic idea is that the fewer time employees have to spend tinkering with machines and doing mindless tasks, and the more comfortable customers are, the more opportunities there are for forming actual connections over coffee.
That means that Starbucks doesn’t intend to replace human employees and automate its supply chain. In their vision, the actual making, handling, and delivery of products are to always be done by human employees so that human connections thrive in Starbucks shops.
Instead, things like the potential for automating non-value-added tasks like cleaning and inventory are explored.
Ultimately, their hope is to develop technology that takes the needs of each specific Starbucks store into account, so that the character and integrity of each unique store are maintained.
The Starbucks of the future will look different and be improved by technology and change with the times, but according to Starbucks CEO Kevin Johnson, if they do it right, 50 years from now it will feel the same.
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Starbucks has been described on several occasions as a tech company, a data company, and even a bank. The corporation can never be described as a coffeehouse chain, it seems too inadequate. Technology permeates every aspect of Starbucks- customer experience, store design, beverage development, supply chain, finance, location, and everything else.
Some of the modern tech fields that Starbucks puts to good use include-
The center of all innovation at Starbucks is the Tryer Center, located in Seattle in Starbucks headquarters. Minds from all levels of the Starbucks management- engineers to baristas- come together here to generate ideas. This involvement perhaps is what makes innovation at Starbucks so successful. There is also a focus on priority being given to the speedy implementation of these ideas, so much so that they are said to go “from idea to action in 100 days.”
One of the most important technologies utilized by Starbucks across just about everything is Big Data. Data working with other technologies is at the center of a lot of innovation by Starbucks.
To know more about this, check out our blog, 6 ways in which Starbucks uses big data.
Artificial Intelligence is also at the core of a lot of operations. Deep Brew, Starbucks’ internal AI engine, was devised for this. Johnson once described this platform as “a key differentiator for the future.”
The recent rollout of technological initiatives was also supported by Starbucks’ collaboration with Microsoft.
All of this technology is integrated into Starbucks to create a better experience for customers. This includes improving the Starbucks mobile app, bettering in-store experience, automation to assist employees, ensuring ethical responsibilities, and so on.
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Most of the features for enhancing user experience is provided through the Starbucks mobile app, first launched in 2011. From being just a way to make payments easy and track rewards, the app has grown into giving you recommendations and telling you stories. It now has around 20 million regular users in just the US. Starbucks’ Mobile Order & Pay system- which lets you order via the app and collect orders from stores, skipping lines- was first launched in 2015, and now almost a quarter of total transactions are mobile orders.
Their Loyalty program gives users rewards and lets them redeem rewards for drinks. This, combined with store timings, menus, and other information that the app provided, quickly increased its popularity. Now the app is a valuable data mine for Starbucks to understand customer preferences and trends.
There are bigger hopes in store for the app. The vision is that in the future the app could emulate the human relationship a customer would have with the friendly barista at their neighborhood coffee shop.
The Starbucks App. (Source: Starbucks)
Using AI and data science to drive business has been implemented through the years since 2017 through Starbucks’ Digital Flywheel program- which was focused on four pillars: rewards, personalization, payment, and order. The AI efforts have been enhanced with collaborations with Microsoft.
Using Machine Learning- particularly reinforcement learning, the previous orders and preferences of customers are analyzed and tailored recommendations are given to them. Customers are more likely to find new things they enjoy and get a more intimate and personalized experience, and Starbucks gets more coffee sold.
Drive-thru ordering has gained in popularity even more since the pandemic closed down many restaurants and eat-in spaces. As of the first quarter of 2021 drive-thru orders from Starbucks had increased more than 10% from what it was before the pandemic.
Starbucks reduces the bottleneck at traditional drive-thru windows by combining it with the order online services provided by the app.
Starbucks has long been committed to the ethical sourcing of its products and materials. Technology lets customers trace each bag of beans across the supply chain right to the source. Digital real-time traceability allows consumers to know where their coffee came from, and is beneficial for farmers.
The supply chain is recorded through blockchain, powered by Microsoft’s Azure Blockchain Service. Along each step of the way from the farm to the store, the movements and transformations of the product are stored in a tamper-proof way and made available to everyone in the supply chain through blockchain.
Starbucks has partnered with Aira to offer free assistance to visually impaired customers. Aira Tech Corp is a San Diego-based company that connects visually impaired people to visual interpreters through a smartphone app. Starbucks has launched Aira assistance for free across all its stores in the US. This is an admirable step towards inclusivity.
Starbucks features on mobile for a better user experience.
The Starbucks app has become so popular that sometimes stores are overrun with a massive inflow of orders. And there is growing concern that the app is doing exactly what Starbucks claims it doesn’t want- weakening connections. Customers may order a drink on the app, run into the store, grab it and run out, without even bothering with basic pleasantries. The company doesn't acknowledge this issue though.
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Starbucks isn’t only trying to make the customer experience better, it also focuses on its store partners. The use of data for subtle improvements and making machines and supply chains better, for instance.
Keeping track of the maintenance of machinery is a time-consuming and disruptive task. Data analytics and forecasting machine repair and maintenance need using AI, helps ease this issue in Starbucks. Machines connected using IoT and cloud provide diagnostic data in real-time, which makes keeping track of them a lot easier, and lessens machine downtime.
In-store machinery connected to the cloud also generates data about the volume and types of drinks generated, which can be used for trend analyses.
Updation of recipes is another thing that connected machines help in. Changes in machine settings to prepare a new product can be automatically updated using the cloud. The centralized control of the menu ensures consistency in preparation, from store to store and order to order. This can be seen in Starbucks’ use of the Clover brewing system for precise control over water temperature and brew time work.
As said before, Starbucks seeks to automate non-value-added tasks. Inventory and storage tasks can be automated and made more efficient, freeing up human employees. Labour and trend forecasts and hiring and onboarding are also some of the areas of innovation Starbucks focus on.
Improvements to machinery are constantly being made at the Tryer Center- like creating new precision milk dispensers and brewing systems.
Product development is also driven by consumer data. Data from cloud-connected machinery and the mobile apps of consumers are combined to form a massive collection of data. Preferences and trends are analyzed to find out what works best during particular times and seasons, and this leads to new beverages with a better shot at success. Data and AI are also used to drive decisions on where best to place store locations, and so on.
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Starbucks also uses technology for marketing. Its social media presence is formidable and it is one of the most popular brands on social media. Its fun drinks have become an aesthetic of sorts that people compete to show off. This is a carefully cultivated image that is the product of years of efforts put into staying ahead of the curve in adapting to the times. The holistic marketing strategies employed by Starbucks have long been admired by the business world.
COVID-19 left everything in a state of disruption- from the global economy to education and most other industries. Although faced with significant losses, Starbucks Corporation made a strong recovery and decided it wasn’t going to wait for the storm out, but instead grow through it. It has closed down locations that were incompatible with the pandemic situations, and focused on drive-thru outlets and making its app better.
Johnson said recently at Fortune’s Global Forum conference-
“What we've really worked [on] is to orient our stores and the store experience that we create to be that place—that third place—where people can come and socialize and reconnect and start to feel some of the feelings and emotions they had before the pandemic.”
Starbucks has therefore adapted to the demands of the world through its strong technological backbone and is focused on bringing about a better future despite the setbacks of the pandemic.
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