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Passengers traveling through airports often encounter a multitude of challenges, including lengthy security lines, delays, and the ever-popular Starbucks locations. Within these bustling terminals, customers frequently experience significant wait times for their favorite beverages and snacks, creating a sense of frustration among travelers, flight crews, and airport employees alike.
Coresa Barrino, a nursing assistant who visited the Starbucks at LaGuardia Airport in New York, expressed her dissatisfaction with the situation. After waiting for over 10 minutes for her coffee, she remarked on the stark contrast with her local Starbucks in Charlotte, North Carolina, where her orders are typically filled in just two minutes.
This issue has caught the attention of Brian Niccol, Starbucks’ new CEO, who took the reins in September following his tenure at Chipotle. He has committed to rejuvenating customer interest and reversing the company’s recent downturn in sales. During a quarterly conference call held on October 30, Niccol highlighted the potential for streamlined operations at licensed locations within airports, suggesting that enhancing workflow could lead to improved service and customer satisfaction.
As the Thanksgiving holiday approaches, Starbucks locations within airports brace for a surge in travelers. The Transportation Security Administration anticipates that December 1 will see record crowds, with more than 3 million people expected to be processed at U.S. airports on that day alone. With increased foot traffic during peak travel periods, the long lines at Starbucks reflect broader challenges faced by the aviation industry amidst a growing demand for air travel.
Overcoming Challenges
Starbucks has recently faced its own set of struggles. The company reported a decline in sales for the third consecutive quarter, with U.S. same-store sales dropping by 6% year-over-year. Niccol unveiled a series of strategies aimed at revitalizing the brand’s image and improving the customer experience, which includes reintroducing condiment bars, removing surcharges for dairy alternatives, and streamlining the menu.
Reducing wait times is paramount in these initiatives, with Niccol aiming to decrease service times to four minutes per customer. While mobile ordering was implemented in airport Starbucks locations in 2022, the system has had mixed results, sometimes complicating the ordering process for unfamiliar travelers. Despite the challenges, streamlining operations in airport locations could significantly enhance both sales and Starbucks’ image during a critical period.
The rebound in air travel post-pandemic offers a strategic advantage for Starbucks and other airport concessions, which contribute approximately 4% of annual revenue at U.S. airports. At Dallas Fort Worth International Airport, for instance, revenue from food and beverage outlets has outpaced passenger growth, showcasing a unique opportunity for the chain to enhance its sales channels.
The Licensing Dilemma
One significant hurdle for Starbucks lies in its licensing model for airport locations. Operating under licensees rather than directly managing these outlets has its pros and cons. The partnership with HMSHost, which began in 1991, expanded to around 400 locations before its conclusion in 2020, allowing other operators like Paradies Lagardere and OTG to enter the market.
While licensing allows Starbucks to avoid operational challenges typically associated with airport venues—such as staffing shortages and high rental costs—it also results in lower profit margins. Starbucks generates roughly 7 cents per every dollar spent at licensed cafes, a stark contrast to the 23 cents it earns from company-operated stores. Despite these concessions, the brand’s reputation relies heavily on the quality and speed of service provided at licensed locations.
Airports are increasingly turning to technology to improve service efficiency in their restaurants. Many operators are incorporating kiosks and mobile ordering systems to streamline customer interactions and mitigate staffing shortages. Tampa International Airport, for example, has introduced digital ordering options for travelers, while Dallas Fort Worth is exploring robotic delivery systems to enhance food accessibility for passengers.
Popular brands, including Starbucks, continue to attract customers, as highlighted by Barrino, who expressed her affinity for the brand despite the wait. As airport conditions evolve and technology integrates more deeply into the customer experience, Starbucks and similar chains must adapt to maintain their status as sought-after stops for travelers.
Source
www.cnbc.com