Starbucks doubles down on hospitality with 'Green Apron Service' strategy

CNBC

4 days ago

As companies lean into value offerings and buzzy beverages to lure price-sensitive consumers, Starbucks is doubling down on its plans to get back to basics by leaning into hospitality at its cafes.
The coffee giant aims to stand out on guest experience in a cutthroat consumer environment as it tries to boost lackluster sales.
Last week, the company began training baristas on its new "Green Apron Service" program as part of CEO Brian Niccol's "Back to Starbucks" plans, which have emphasized friendlier cafes and a human touch like Sharpie drawings on cups. Green Apron Service builds on that, relying on warm and engaging interactions with customers in the hopes of making Starbucks visits a habit.
The program is backed by changes to ensure proper staffing and better technology to keep service times fast. It was born out of growth in digital orders, which now make up over 30 percent of sales, and feedback from baristas.
"The strategy is to reconnect our partners with our customers," Chief Operating Officer Mike Grams told CNBC from a newly-revamped store in Seattle on Monday.
"..When you walk through that door, you're greeted with a smile. You are greeted again at handoff, a perfect cup of coffee ... and you're met with that connection."
Investors will get another look into how Niccol's turnaround plans are working when the company reports earnings after market close Tuesday. Starbucks shares have climbed about 2.7% this year, trailing the 8.6% gains of the S&P 500, as Wall Street debates how long it will take Niccol to improve the chain's performance. Since Niccol took the reins last September, the stock is up just under 3%, and has climbed nearly 25% on a one-year basis.
Niccol is trying to jumpstart the coffee chain's sales. Last quarter, same-store sales fell for the fifth quarter in a row.
Grams and the push for more welcoming cafes will play a major role in that effort.
Grams was appointed as chief operating officer in June, overseeing global coffeehouse development, the company's worldwide supply chain and its North American coffeehouses. He came to Starbucks in February after nearly three decades at Taco Bell, where he was previously was the chain's president and global chief operating officer. Niccol was once Taco Bell's chief executive.
The Green Apron Service push is the largest investment the company has ever made in hospitality and its store employees, Grams said. The company did not provide a dollar figure for the investment.
Part of the plan involves Smart Queue technology, which uses algorithms to enhance staffing and scheduling, to help baristas deliver more consistent and higher-quality service, Grams said. The company wants customers to experience consistency in service quality whether they order in store or online.
"You will see it show up in different ways," he said. "You may see a digital host out front who is navigating that experience ... it can be an extra person at the drive through. The idea is just really making sure that we've got the right partners in the right place at the right time throughout the entire day."
Success of the Green Apron Service initiative will be tied directly to measurable indicators like customer experience scores, foot traffic growth, and store productivity.
The effort also comes as cafes face new benchmarks for success, including delivering customized drinks in four minutes or less. Early results from its 1,500-store pilot of Green Apron Service showed improvements in transactions, sales, and customer service times, with 80% of in-cafe orders meeting the chain's four-minute goal.
Continuing to build on that trend will likely be key for Starbucks. The reality is customers may prefer speed over warmth and have little tolerance for long waits.
Grams said Starbucks has multiple avenues to remain competitive, including a strong digital business, drive-thrus in more than 7,000 stores and cafes going through "uplifts" to make them more comfortable.
"It's showing up in a way where we touch all three channels," he said of the hospitality initiative. "We have 20,000 units across North America, which gives us a terrific competitive advantage."