Starbucks Trouble With Long Lines

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Starbucks Corp. (NASDAQ: SBUX) has struggled over the past year. Its stock is down by 25%, which compares poorly to the broader market. Labor troubles have left some employees bitter. Interim CEO Howard Schultz says he plans to reinvent the company to improve it for employees and customers. New CEO Laxman Narasimhan will not start the job until April 1 of next year, when he inherits Schultz’s changes. That boxes him into a corner from his first day on the job. One challenge for both men is that people often have to wait in Starbucks lines too long.
Starbuck has two types of lines. One is inside stores. The other is the cars that use drive-up windows. Anecdotally, cars have left these lines because they are too long. That means a customer probably goes elsewhere. McDonald’s may be an excellent alternate destination.

Customers will not know what triggers these delays. One cause could be disgruntled workers. Another could be the long time it takes to make drinks, a problem Schultz says he can fix with more advanced coffee machines.

Long lines hamper many fast-food operations, but Starbucks admitted in March that the trouble had been a challenge. The employee morale and “slow machines” cannot get fixed overnight. Starbucks lost ground in the American Customer Satisfaction Index. Narasimhan could inherit them.

Long lines are a matter of perception. One person’s long 15-minute wait could be another’s short 15-minute wait. However, the target to shorten these times means a better chance of customer retention. Once someone goes to McDonald’s (which has outperformed the market in the past year), they may not return to Starbucks.

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