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Starbucks failed to reach its expected first quarter sales as congestions in US stores negatively affected customer satisfaction.
According to Starbucks, estimated sales grew by 3% over the first quarter of fiscal year 2017, which ran from October 2016 to January 1, 2017. However, the growth was lower than expected, with Starbucks falling behind the 3.9% growth rate that business analysts predicted. Starbucks CEO Kevin Johnson admitted that mobile orders through the Starbucks app caused some operation challenges.
More than 20% of customer transactions in the United States are orders from the Starbucks app. Because of this, the company decided to increase the number of pick-up sites, or stores that accommodate app orders, from 600 to 1,200. However, as the app gained more popularity, overall customer satisfaction declined.
Data showed that while Starbucks’s sales increased, the number of walk-in customers decreased. The app allows users to order in advance and skip lines in Starbucks stores. However, because of the increase of customers who pre-order, walk-in customers have to wait long before their orders can be prepared.
Johnson refused to share particular details when asked how the company plans to resolve the issue. He reassured the public, however, that the problem is being solved.
Johnson also acknowledged that aside from the app, changes in consumer habits may have also affected sales. The restaurant industry has been suffering from a decrease in store traffic as more consumers prefer buying groceries and eating at home. The number of people who visit restaurants in malls has also declined since many customers prefer shopping online instead.
Despite this trend, business analysts say that Starbucks remains stable, showing consistent growth in the United States and abroad.