Starbucks’ sales continue to rise, and its digital platforms continue to grow, but none of these initiatives are enough to escape the challenges created or worsened by the COVID-19 pandemic — high inflation, supply chain shortages and staffing challenges.
The Seattle-based coffeehouse chain, the world’s largest restaurant company by revenue, announced Tuesday (Feb. 1) its financial results for the first quarter of 2022, which ended Jan. 2. Even with the brand’s 19% year-over-year increase in consolidated net revenues and its 21% year-over-year increase in the number of 90-day active members of its loyalty program (which reached 26.4 million), the chain still saw its pandemic recovery thrown off course.
Given the company’s otherwise strong results, Starbucks’ difficulties certainly do not bode well for other restaurants that do not have the resources to boost their sales to the same degree.
One such way that Starbucks is utilizing its resources to help combat these challenges is by automating more of its store’s operations.
“The work that we’ve got going on around automated ordering — that continues to be put in place to reduce those manual routines of our of our partners,” Starbucks President and CEO Kevin Johnson told analysts on a call. “We continue to make investments in improved functionality for our equipment and better, better flow-through of that equipment, in terms of what it’s able to produce, whether that’s a strainer to machines, whether that’s the warming oven, or whether that’s our cold brew system.”
For example, in November, Starbucks debuted its cashier-less checkout concept utilizing Amazon’s Just Walk Out technology in New York City. At the time, the company stated its intentions to two open at least two more such locations in 2022. If the model proves viable on a larger scale, the company has the opportunity to dramatically reduce its labor costs.
Related news: Starbucks Debuts Cashierless Café Powered By Amazon Go
Additionally, increases to the chain’s rewards programs are helping the brand to boost customer frequency while incentivizing digital ordering, a more labor-efficient model.
“Starbucks Rewards now represents 53% of the spend in our stores, which is at an all-time high, and which is a three-point increase versus fiscal Q1 fiscal 21,” said Johnson. “Their growth in terms of spend has grown commensurately. We’re seeing significant increase in the spend in the first year of membership versus the prior 12 months of the preceding membership… and rewards members … are spending it at elevated rate and visit our stores at three times frequency rate versus our non-members.”
Across brands, loyalty programs can be a huge driver of spending, especially for consumers on the younger side, according to data from the January edition of PYMNTS’ Digital Divide report, “The Digital Divide Report: Minding The Loyalty Gap,” created in collaboration with Paytronix. The study, which featured the results of a census-balanced survey of more than 2,400 U.S. adults about their restaurant habits, found that more than half of consumers in their early forties and below use loyalty programs, and that share jumps to about six in 10 for Gen Zers.
Read more: Restaurants Compete to Make Loyalty Programs Stand Out as Consumers Join Multiple Programs
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