By Heather Haddon and Isabelle Bousquette

Starbucks says new technology is helping fix one of its customers' biggest gripes: waiting too long for their coffee.

A technology pilot at dozens of U.S. locations has shaved two minutes off the average time to make a beverage ordered inside cafes. Starbucks said three-quarters of orders at the test cafes' busiest times were completed in four minutes or less, nearing its service-time goal, while not delaying mobile orders.

The Seattle-based chain plans to soon expand the pilot to hundreds more of Starbucks's 10,000 U.S. locations as the company seeks to recapture lost sales and improve customer sentiment. "We've seen such positive benefits from it that the rollout is happening very quickly," Chief Technology Officer Deb Hall Lefevre said in an interview.

Starbucks is looking to jolt its business after reporting five consecutive quarterly declines in same-store sales. Customers have balked at the chain's prices and lines, turning to rivals for cheaper and faster coffee.

Starbucks said Tuesday its second-quarter U.S. and global same-store sales fell 2% and 1%, respectively. The declines were smaller than those Starbucks reported for the previous quarter.

Adjusted earnings per share came in below analysts' expectations, while revenue largely met targets, according to FactSet. Starbucks said that labor investments to improve store service weighed on its profit, along with costs associated with corporate layoffs earlier this year.

Starbucks's shares declined 1% in after-hours trading. Chief Executive Brian Niccol said improvement in customer transactions was notable given the tough consumer environment.

Niccol, who took the reins of the world's largest coffee chain last September, has said that Starbucks needs to improve its speed of service, particularly during the morning rush. Earlier this year, Niccol said about half of in-store orders took longer than four minutes. Mobile orders averaged around six minutes to complete.

Baristas currently handle orders on a first-come, first-served basis. Starbucks anticipates the new algorithm, which it started working on this year, will determine sequencing across cafe counters, drive-throughs and apps.

Niccol previously oversaw turnarounds at Taco Bell and Chipotle Mexican Grill, and earlier this year recruited former Taco Bell colleague Meredith Sandland to lead chain development. Starbucks also brought on six engineers who had worked for Sandland at a software startup that helped restaurants better manage delivery orders. The team helped build the new proprietary order-scheduling algorithm in-house, Starbucks said.

Starbucks is also using the new technology to experiment with scheduling specific pickup times for mobile orders. Baristas are learning to time the making of mobile orders based on factors such as order complexity, aiming to prevent drinks sitting out for minutes before a customer arrives, Starbucks said.

Lefevre said the new order-sequencing algorithm is "rules based," following a predetermined "if-then" structure, rather than being powered by artificial intelligence. Sandland said it has room to grow more complex over time.

The company is harnessing technology in other areas, including improving its staffing levels. Currently it also has a 700-store pilot aimed at putting the right number of workers in cafes based on demand.

Starbucks on Tuesday reported $8.8 billion in revenue for the three months ended March 30, up 2% from last year's period. Earnings per share adjusted for one-time items were 41 cents, short of the 49 cents expected by analysts.

Quarterly per-share profit dropped 50% to $384 million compared with the same period last year.

Write to Heather Haddon at heather.haddon@wsj.com and Isabelle Bousquette at isabelle.bousquette@wsj.com

(END) Dow Jones Newswires

April 29, 2025 16:45 ET (20:45 GMT)

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