Starbucks Targets Airport Efficiency to Boost Sales
Starbucks is set to enhance its airport operations in a bid to reverse a recent sales decline, according to new CEO Brian Niccol. Appointed in September from Chipotle, Niccol is focused on improving customer experiences and addressing long wait times that have frustrated travelers, employees, and flight crews alike.
At a recent conference in Dubai, Niccol highlighted airports as a key area for improvement. “The subcontinent is on our radar, particularly India for the sheer market size,” he said during the Skift Global Forum East. He emphasized that airports present a significant opportunity to streamline service and increase throughput, especially during peak travel periods like Thanksgiving, which is expected to be the busiest travel season ever.
Travelers frequently encounter delays at airport Starbucks locations, with long lines for popular items such as cappuccinos, cold brews, and egg bites. Coresa Barrino, a Starbucks patron at New York’s LaGuardia Airport, shared her frustration after waiting over ten minutes for her coffee, compared to the usual two-minute wait in Charlotte, North Carolina. Such experiences have drawn the attention of Niccol, who is determined to implement a better system to reduce wait times to four minutes, enhancing overall customer satisfaction.
Starbucks has been grappling with declining sales, experiencing a 6% drop in same-store sales in the U.S. from the previous year for the quarter ending September 2024. Consumers have been pushing back against higher prices and have not fully embraced initiatives like discounts and energy drinks aimed at attracting customers back. In response, Niccol unveiled plans to improve the customer experience by reintroducing condiment bars, eliminating surcharges for dairy alternatives, and simplifying the menu to expedite service.
One significant challenge lies in Starbucks’ licensing model, where third-party operators manage airport locations. While this approach alleviates Starbucks from the complexities of airport operations, such as staffing issues and high rents, it has also led to inconsistent service levels. With over 16,300 locations in the U.S., about 60% are operated by licensees, including those in 47 of the 50 busiest airports. This model generates less revenue per dollar spent compared to company-owned stores, as Starbucks earns only licensing fees and royalties from these locations.
To address these issues, Starbucks is enhancing its technology at airport outlets. Although the rollout of mobile order and pay began in 2022, it sometimes adds to confusion rather than alleviating it. Niccol aims to refine this system to better serve both regular and new customers who may not have the app installed. Additionally, airports are adopting more digital solutions, such as kiosks and pre-order platforms, to manage the surge in demand during busy periods.
During the upcoming Thanksgiving travel surge, Starbucks’ airport locations will be put to the test. The Transportation Security Administration forecasts over 3 million people screened on Sunday, Dec. 1, potentially making it the busiest day of the year. This influx underscores the need for efficient service at concessions, which account for about 4% of U.S. airport revenue annually. Improving Starbucks’ airport operations could significantly enhance both sales and the brand’s reputation during this critical period.
Niccol’s strategic focus on airports aligns with broader trends in the aviation industry, where increased passenger numbers and larger aircraft are driving demand for efficient concessions. By optimizing service times and leveraging technology, Starbucks aims to provide a better experience for travelers, ultimately boosting sales and customer loyalty.
As air travel rebounds post-pandemic, Starbucks and other restaurant chains have a prime opportunity to capitalize on increased passenger traffic. Effective improvements in airport locations could help Starbucks regain its footing and meet the high expectations of today’s travelers, ensuring a stronger performance in the competitive coffee market.
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Sources: AirGuide Business airguide.info, bing.com, cnbc.com