The Wisdom of Long Lines at Starbucks

Starbucks delivered news of continued blockbuster results for its Mobile Order & Pay program in its last earnings call, with a caveat that increased demand has presented operational challenges in some locations. More specifically, mobile ordering has performed so well – doubling to 7 percent of sales since last year – that many Starbucks stores are faced with ironing out bottlenecks driven by increased demand and store congestion.

This is a good thing.

Of course, an organization of Starbucks’ caliber is no stranger to overcoming operational challenges and has already set a plan in place to overcome store congestion. Even so, in the days following the earnings report, concerns swirled around the restaurant community: is too much mobile demand a problem?

Having launched digital ordering programs with over 100 brands throughout the years, I can assure any concerned investor or analyst that long lines and temporary pickup bottlenecks are healthy reminders that digital is well on its way to eclipsing offline ordering. All restaurateurs must take note and stay agile in adjusting operations accordingly, monitoring the ‘vital signs’ that come with introducing this new service channel.

Fortunately for restaurateurs, there are tools in place to improve processes at each store. As digital ordering finds traction, restaurant brands should prepare for a continuous series of process and infrastructure changes to better handle all consumers, including: improved signage and messaging, additional food and beverage prep stations for digital orders, smarter capacity management and order throttling, and even an evolution in the physical layout of their restaurants. Brands have plenty of new data at their fingertips to keep improving, but would also benefit from traditional retail tactics like a secret shopper program to monitor the mobile ordering and pickup experience on the ground at their restaurants.

This isn’t just about channel shift, either. Customers spend more digitally – anywhere from 20-70 percent more depending on the brand – than they do when placing orders in person or over the phone and typically increase their visit frequency once this new convenience layer removes the barriers to visiting, which can range from elements as tangible as saved customer time to softer benefits like not needing to leave your vehicle while traveling with kids.

The most innovative restaurant brands treat digital ordering as a means of driving higher total sales from the same physical footprint, maximizing their revenue per square foot. As they realize success in this regard, they will need to be vigilant about bottlenecks in front- and back-of-house operations. In some cases, that could mean not having the capacity to prepare more orders without slowing service – in others, suffering from poor physical layouts that don’t deal with the two consumer cohorts simultaneously very well.

Restaurant operations and real estate executives should handle redesigns with the digital customer in mind. Sweetgreen’s latest location on the Upper East Side in Manhattan maximizes space for its on-the-go guests by eliminating the dining room entirely.

We will continue to see evolution of restaurant layouts to accommodate the needs of the digital guest. After all, it’s all about “extending the in-store experience to a digital experience” as Starbucks COO (soon-to-be CEO) Kevin Johnson pointed out recently. The brands that can capitalize on operationalizing mobile and online orders by continuing to iterate on their service model will win.

Written by Marty Hahnfeld, Chief Commercial Officer, Olo


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