Starbucks CFO talks reinvention plan for customers and partners
Starbucks CFO Rachel Ruggeri joins Yahoo Finance Live to discuss the coffeehouse company’s reinvention plan, elevating costumer and partner experiences, cutting down wait times, providing employees with competitive wages and benefits, and the outlook for long-term profit growth.
Video Transcript
[AUDIO LOGO]
- Welcome back, everyone. Starbucks has revealed its reinvention for the next three years, including a series of changes coming to its cafes, such as more drive-thru windows, upgrades to mobile ordering as well factored in there. This all coming in an effort to become more effective and efficient. Joining us now to break down the reinvention plan, the Starbucks CFO, Rachel Ruggeri.
Rachel, great to have you here with us this morning. So first and foremost, I mean, when we look through some of the elements of the plan, this ranges, as we were mentioning, from the types of store experience that people are going to be having, as well as that mobile experience. So where do you really prioritize the effort moving forward from here and what is the difference that the customer is going to see?
- Well, thank you for having me this morning. I'd start with the fact that it's really about what our customers want. And so, that's why our purpose-built designs, whether it be through a drive-thru only, a drive-thru store with a cafe, a delivery only store, it's really about where our customers need us to be. And so, I would say the customer would have an elevated experience through a more purpose-built design that better meets their needs while making it a better experience for our partners. That's really what we're planning for the future.
- Rachel, it seems like a lot of these changes are based around the latter constituent you talked about, that is the partners, i.e. The people who work in Starbucks, right? Making things easier, making things quicker for them as you guys have added a lot of complexity and different drinks onto the menu. I have a random question for you, Rachel, I apologize.
- Sure.
- Have you ever worked-- like, have you guys as executives, do you guys go into the stores and do you ever work the line to kind of experience what the workers there are experiencing?
- It's a great question. I've been at the company for over 18 years. And part of my immersion when I was started was a store experience. So I had a week in the store. But, remind you, this is like back in 2001 when I first started. So we've all had store experiences.
And we do a thing called Holiday Helper, which was we help out in the store. To be able to get an experience of what it's like day-to-day, but I would say the opportunity to get behind the line. Because when I do Holiday Helper, as an example, I'm great at cleaning up, but I am not behind that bar, I don't think I'm well-trained enough. But I think it's a great opportunity just because the business has become so complex.
But being in our partner's shoes is really what's grounding everything that we're doing. And so we're doing it through collaboration sessions and being able to listen and be able to learn while having some on the job experience over time. But that's how we really try to get in the shoes of our partners.
- Yeah. I mean, I imagine so. And as we see this unionization push at Starbucks, I know it's not just about things, like pay and benefits and all of that trust, but it's also about the experience of working there. One of the things that stood out to me, the new dispensers for the mocha frappuccino that are going to cut the time to 35 seconds from 86 seconds. Which doesn't sound like a lot, but if you're working in there and people are slinging orders at you and it's really quick. What are you hearing from the Starbucks workers about what they need in that increasingly complex environment?
- I would say the most important thing that we can provide outside of things like competitive wages and benefits is time. And that's really what the reinvention plan is focused on is creating the time for our partners. Because what they enjoy most is connecting with customers. That's what they like.
And like the store I go to every single morning, they're so good at customer connection. And part of that is being able to ensure that our partners have the time to do that. And so, the reinvention plan, whether it be through efficiency in our stores with equipment, whether it be through automation, it's not about having a robot in the store, it's about creating activities out of the store that are non-productive. Things like inventory , counting things like steps to build a drink so that the partners focus on what they love, which is craft, creating that craft of the beverage as well as the connection.
- With all of this in mind, I mean, there's so much of the digital touchpoint that Starbucks has really prioritized in that customer experience. And when you think about the type of ticket that you're seeing as a result of that with some of these changes, I mean, what's the what's the Delta going to look like from your financial expectations if you do see more people opting into a mobile capacity versus just a pure go into the store, buy it then, and have this fanfare around the experience?
- Well, I would say what we were speaking about yesterday that Brady Brewer our chief-marketing-officer highlighted, is that experiential convenience, the convenience of Starbucks, the connection of Starbucks is in any place that you come to see us, whether it be through MOP, whether it be through drive-thru, whether it be in-person in the cafe is creating an experience that makes your day a little bit better.
And some of the things that we talked about even yesterday and we showcased is even in mobile order and pay, for example, when you go to pick up the drink, if someone's there to hand it to you, if someone's there to just greet you, putting a label on that has, like, a good morning, have a great day, that sort of connection is what we're looking at in whatever way you come to us.
That's in the drive-thru as well. A lot of the TikTok videos that we showed in yesterday's presentation were experiences that customers were having even in drive-thrus. And so that's really what we're focused on is creating that moment of connection in whatever channel, in whatever way a customer chooses to come to us all rooted in the fact that when we give the time and the ability for our partners to be able to craft the way they want and connect, that's what really is the superpower of Starbucks.
- Certainly. Last thing, while we have you here, I got to ask about the PSL season here. Because for so many companies, they've been moving it forward and it's seemingly gotten early and earlier in the year. For Starbucks, though, a little bit different of a strategy. What is the net difference that you see specifically from PSL season and this year versus a normal year? This year, people are looking across their spending habits and they're trying to measure exactly where those dollars are going out the door.
- Yeah. You know, what I would say is we're honored by the fact that our customers still continue to find our promotional periods, whether it be summer, whether it be fall relevant. And that's something you can never take for granted, and we don't. So we continue to find ways to innovate.
Even if it's pumpkin season, there's different offerings with our pumpkin season, pumpkin cream cold brew as an example. And so we continue to innovate, we continue to try to drive value for our customers. And I would say, as Howard had shared in the meeting yesterday, we had one of the best fall launches that we've ever had in our company's history. And I think it speaks to not only the power of the brand, but it speaks to the partners and the craft and the connection that they create and this continued innovation we have to delight and surprise our customers even after all these years.
- Well, I think both Brad and I are people who are, frankly, baffled by the pumpkin spice phenomenon.
- Absolutely "outraged" is the word, Rachel.
[LAUGHTER]
- Beside myself.
- I'm a plain coffee with half-and-half girl.
- Listen, I'm an espresso drinker. So I'm an everyday espresso drinker. But I love that so many customers love it and in new and different ways. You know, my sister is the first person who gets excited for fall. I love summer, so I don't want to see fall. She gets so excited and she cheers when it's pumpkin season. "Pumpkin at Starbucks" is what she cheers.
- Yeah we have some colleagues in that camp as well.
[LAUGHTER]
All right, Rachel Ruggeri, good to catch up with you. Thank you.
- Thank you.
- Starbucks CFO, take care.
