On first earnings call, Starbucks CEO Brian Niccol details plan to ‘bring order’ to mobile ordering

Improving the mobile ordering experience at Starbucks is high on Brian Niccol’s to-do list as he takes the CEO reins at the Seattle coffee giant.

The former Chipotle CEO joined Starbucks last month to help lead a turnaround of a slumping business that reported a 3% drop in revenue for its most recent fiscal quarter.

Niccol laid out near-term priorities on his first earnings call with analysts on Wednesday — which includes addressing the company’s mobile ordering system.

Mobile orders are a crucial part of the business, making up more than 30% of transactions at Starbucks. But it’s become somewhat of a sore spot due to inaccurate wait times and the congestion it creates inside stores.

Niccol said the company is focused on three initiatives related to mobile ordering:

• Improve sequencing with a new algorithm that enables accurate pickup times for mobile orders.
• Placing “common sense guardrails” on the ability to customize mobile orders.
• Separating mobile order pickup areas from the “cafe experience” inside stores.

“We’ll bring order to mobile-order-and-pay so it doesn’t overwhelm our cafes,” Niccol said on the call.

Niccol wants to create separate areas inside stores specifically for mobile orders, rather than sharing a pickup spot with customers who order at the counter.

“If you need to be quick, you can be quick, and we’ll be on time with it,” he said.

In some ways, he’s following the Chipotle playbook. Niccol helped transform Chipotle’s digital ordering system, creating a second cooking area in the back of restaurants focused exclusively on online orders, while also adding a new computer system that surfaced those orders.

Chipotle also created “Chipotlanes,” or drive-thru pickup windows specifically for digital orders.

Niccol said Wednesday that he also wants to scale investment in Siren Craft, a tech-enabled system that debuted two years ago to help baristas streamline order preparation. His goal is to get orders to customers in four minutes or less.

“I’m putting a full court press on solving four minutes,” he said.

Starbucks is already rolling out some changes under Niccol’s purview, such as eliminating additional charges for non-dairy milk substitutions, bringing back condiment coffee bars, getting rid of some items, and reducing complexity in its menu “to align with our core identity as a coffee company,” Niccol said.

Niccol appears to be taking a methodical approach in his new role at Starbucks.

“As we get the foundation reset, I believe there are a lot of additional catalysts for growth in the business,” he said.

Starbucks’ global comparable store sales declined 7% in its more recent quarter, while non-GAAP earnings per share of $0.80 declined 25% year-over-year. The company’s traffic is also declining.

“Our financial results were very disappointing,” Niccol said Wednesday. “It is clear we need to fundamentally change our strategy to win back customers and return to growth.”

He added: “My experience tells me that when we get back to our core identity and consistently deliver a great experience, our customers will come back. Our problems are fixable. Most of what we need to do is in our control.”