Starbucks Turns To AI And Automation In Bid To Revive Customer Growth
Starbucks is leaning heavily on technology – including artificial intelligence and robotics – as it works to reverse years of sluggish sales and reconnect with customers.
At some drive-through locations across the United States, customers placing orders may unknowingly be interacting with AI-powered systems rather than human staff. Inside stores, baristas are increasingly supported by digital assistants that help recall drink recipes, organise work schedules and streamline daily tasks. Elsewhere, automated scanning tools are now handling inventory checks, a move aimed at reducing product shortages that have long frustrated customers and employees alike.
These innovations form part of a broader investment drive running into hundreds of millions of dollars as the 55-year-old coffee chain attempts to stabilise its business. Early signs suggest the strategy may be paying off. Last week, Starbucks reported its first increase in same-store sales in the US in two years – a key milestone in its largest and most lucrative market, which generates roughly 70 percent of company revenue.
Despite the encouraging sales data, investors remain cautious. Starbucks’ share price fell about five percent following the results, reflecting concerns that heavy spending – including a $500 million push to increase staffing levels – has weighed on profits.
Chief executive Brian Niccol said he remains confident that consistent sales growth will eventually offset the financial strain. Speaking to the BBC, Niccol stressed that technology investments are central to the company’s plan to find $2 billion in cost savings over the next three years while improving margins.
Niccol took over the role in 2024 during a turbulent period for Starbucks. The company was grappling with customer backlash over repeated price hikes, intensifying competition, calls for boycotts tied to labour disputes, and criticism over its position on the Israel-Gaza conflict.
Soon after his appointment, Niccol moved quickly to halt price increases, simplify the menu and introduce a four-minute target for order completion. Starbucks also cut thousands of corporate jobs, shut underperforming outlets and sold a large stake in its China business.
However, Niccol has often framed the company’s challenges as cultural rather than purely financial. He has argued that Starbucks drifted too far toward operational metrics and efficiency, losing sight of its identity as a neighbourhood coffeehouse.
To restore that sense of connection, employees were encouraged to return to handwritten names on cups, while stores began undergoing refurbishments featuring warmer interiors, comfortable seating and ceramic mugs. Each outlet is expected to receive upgrades costing about $150,000 over a four-year period.
At the same time, Starbucks has introduced tougher internal policies, including stricter dress codes and rules limiting restroom use to paying customers.
While the growing use of AI may seem at odds with the company’s renewed focus on human connection, Niccol insists the two approaches are complementary. He says automation helps remove friction from the customer experience, allowing staff to focus more on service and hospitality.
Among the initiatives being tested are AI chatbots that suggest drinks based on customer preferences or moods, scheduled ordering to reduce wait times, and automated order-taking at drive-throughs.
Addressing investors recently, Niccol outlined ambitious global expansion plans, particularly outside the US, where Starbucks aims to nearly double its footprint to close to 40,000 stores in the coming years.
Although the company is not ruling out future price increases, Niccol said it remains a last resort and would be implemented cautiously. He is also counting on easing inflation, softer coffee prices and policy changes – including the removal of coffee from US tariff lists – to help control costs.
While online backlash against Starbucks has subsided, tensions with labour unions persist. Union organisers continue to accuse management of delaying contract negotiations, while scrutiny has also fallen on Niccol’s pay and working arrangements. The chief executive received compensation valued at $97 million in 2024 and $30 million last year, compared with average employee earnings of about $17,300.
Niccol said he is open to dialogue and hopes to reach an agreement with unions, though he declined to give a timeline.
Ultimately, he believes Starbucks’ competitive edge lies not just in coffee, but in its role as a communal space.
“People want places to gather,” he said. “If we can provide a place where everyone feels welcome and safe, then the Starbucks brand will continue to matter.”
