Starbucks is rolling out artificial intelligence tools across its US stores as part of a broader investment drive aimed at reviving sales, a strategy the company says is beginning to show results after several years of declining performance.
AI Enters The Coffee Shop
At some Starbucks drive-throughs, customer orders are now being taken by an AI system rather than a staff member. Inside stores, baristas are using a virtual assistant to recall drink recipes and manage schedules, while an automated scanning tool has been introduced to count inventory and reduce out-of-stock issues.
The technology forms part of hundreds of millions of dollars in investment by Starbucks, which is seeking to stabilise operations and improve customer experience after a prolonged sales slump.
Signs Of Sales Improvement
Last week, Starbucks reported its first increase in same-store sales in the US in two years. The US remains the company’s largest market, accounting for about 70% of total revenue.
Despite the sales improvement, the company’s share price fell 5%, reflecting investor concern that the level of spending, including $500m (£363m) allocated to boost staffing, has weighed on profits.
Focus On Costs And Profitability
Chief executive Brian Niccol said he expects consistent sales growth to help address profitability concerns. Starbucks has committed to finding $2bn in cost savings over the next three years, making efficiency gains from technology a central part of its plan.
Niccol said the company believes improved sales and operational changes can support better financial results over time.
Leadership Changes And Strategic Reset
Niccol joined Starbucks in 2024 as the business faced pressure from price increases, intensifying competition, and boycott calls linked to labour disputes and the company’s stance on the Israel-Gaza war.
He moved quickly to halt further price rises, simplify the menu, and set a goal for baristas to complete orders within four minutes. Starbucks also cut thousands of corporate jobs, closed underperforming locations, and sold a large stake in its China business.
Balancing Technology And Experience
Niccol has described Starbucks as having drifted too far toward efficiency metrics at the expense of in-store experience. To address this, staff have been encouraged to write customer names on cups by hand, and stores are being refurbished with armchairs, new paint, and ceramic mugs.
Each store refresh costs about $150,000 and is expected to take four years to complete. At the same time, the company has introduced stricter staff uniforms and rules limiting bathroom use to paying customers.
Expanded Use Of AI Tools
Starbucks is also testing an AI-powered chatbot designed to suggest drinks based on customer preferences, and is introducing scheduled ordering to reduce waiting times. In drive-through locations, AI systems are being trialled to process orders, allowing staff to focus on preparing drinks and customer service.
Niccol said the aim of using AI is to reduce friction rather than replace personal interaction.
Growth Plans And Pricing Outlook
At a recent investor day, Niccol outlined plans to expand Starbucks’ global footprint, particularly outside the US, with a target of nearly doubling the number of stores to about 40,000 in the coming years.
While the company is not ruling out future price increases, Niccol said pricing would be a last resort and any adjustments would be limited. He said easing inflation, lower coffee prices, and the removal of tariffs on coffee by Donald Trump could help control costs.
Labour Disputes And Compensation Scrutiny
Although online criticism of Starbucks has faded, disputes with unionised baristas continue. Organisers have accused Niccol of delaying contract negotiations, while his compensation and working arrangements have drawn attention.
Niccol received a compensation package worth $97m in 2024 and $30m last year, compared with average employee earnings of about $17,300. He said he remains open to discussions but did not give a timeline for reaching an agreement.
Emphasis On Cafes As Community Spaces
Niccol said Starbucks does not plan to reverse its labour investments as it seeks savings elsewhere. He told analysts and the BBC that the company’s differentiation lies in its cafes rather than its products, describing stores as places where people gather across age groups.
Featured image credits: Pexels
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