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OM in the News: Starbucks Tries Mobile Order/Pay Only Stores

April 4, 2017

 

Starbucks is opening a new coffee shop that only accepts orders placed on a mobile device, reports Geekwire (April 3, 2017). Starbucks now has more than 9 million mobile paying customers, more than a 1/3 of which use the Mobile Order & Pay (MOP) program that lets customers order with their smartphone and skip the line.

However, Starbucks has a problem. The uptick in mobile orders is creating congestion inside stores for mobile order-ahead customers trying to pick up their coffee and food at hand-off stations. This not only affects customers who are picking up items, but also potential customers who may notice the in-store traffic and end up not purchasing anything.

“We’re going to redesign new stores and existing remodels to reflect the fact that MOP is obviously going to be a significant part of the business,” said Chairman Howard Schultz. In response, Starbucks is adding dedicated stations for mobile order-ahead customers, distinct from existing in-store registers. There were 1,200 stores in the U.S. that saw more than 20% of transaction volume come from MOP during peak hours last quarter.

TheStreet’s Jim Cramer said that if Starbucks can solve “the throughput problem with mobile ordering, then its stock can go much higher. Starbucks has to become a technology company that gets your coffee to you without a throughput problem.”

Classroom discussion questions:

  1. How can Starbucks handle the throughput problem?
  2. Is it a mistake to create MOP only stores?
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