The coffee chain under Brian Niccol has implemented a series of tech-enabled initiatives over the past year to boost internal productivity and customer experience.
- Starbucks on Friday announced the appointment of Anand Varadarajan as its next CTO, effective Jan. 19.
- Varadarajan has a strong track record of tech leadership and experience in consumer retail at a massive scale, which could help Starbucks take its tech initiatives to the next level.
- Starbucks Green Dot Assist and AI-enabled inventory tool, among others, have helped improve productivity at Starbucks cafes.
Since Brian Niccol took over as Starbucks’ CEO late last year, technology has been a central pillar of his turnaround strategy for the struggling coffee chain. Now, with Starbucks tapping a senior Amazon technology veteran as its new chief technology officer, Niccol’s plans look set to gain real momentum.
New Appointment
Starbucks on Friday announced that Anand Varadarajan would be its next CTO, starting Jan. 19. Varadarajan is a vice president of Amazon’s Worldwide Grocery Technology and Supply Chain unit and has spent nearly 19 years in senior tech roles at the e-commerce giant. He will fill a role left vacant after Deb Hall Lefevre, who left in September.
In a company statement, Niccol said Varadarajan has built technology that “helps teams move with speed and agility” and “drive operational excellence,” adding that he is also a coffee enthusiast. The coffee narrative aside, Varadarajan stands out as a seasoned leader who has run technology at a massive scale and brings deep retail experience – attributes that should serve Starbucks well.
Niccol has implemented several tech-enabled initiatives this past year, which seem to have contributed to what is now a steadier business than before (sales growth has consistently risen in the last three quarters; see chart).
Niccol Relying On Tech To Boost Productivity
Over the summer, the company rolled out an AI-driven inventory-counting system and Green Dot Assist, a generative AI-powered virtual assistant for baristas.
This system uses handheld tablets with computer vision to quickly count stock and flag low inventory, enabling faster replenishment and saving workers’ time. The Green Dot assistant is essentially an iPad-borne internal chatbot for worker queries, such as finding a recipe or troubleshooting regarding a work process.
Starbucks’ app and mobile ordering have been key focus areas for Niccol, who believes a stronger technology stack – spanning both internal systems and customer-facing applications – is the right lever to lift productivity and speed up order times.
The company runs a “Green Apron Service” initiative aimed at cutting wait times to just four minutes, along with tweaks that improve barista workflow. Separately, Starbucks Rewards members can order customized drinks through the app as part of an initiative launched in July.
Positive Results
While novel, the initiatives came in the backdrop of concerns about tech-driven job losses and a long-standing tussle between Starbucks baristas and management over better pay and benefits.
In September, Starbucks published an update on its “Back to Starbucks”, the umbrella turnaround program that Niccol announced exactly a year ago. It said it managed to prepare drinks in under 4 minutes and boost foot traffic at several cafes.
In the last quarter, Starbucks posted its first comparable sales gains in nearly a year and a half, driven by 1% same-store sales growth in the U.S. and 3% in international markets. Still, the SBUX stock, which has largely traded within a range since August, is down 3.5% year to date.
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