Starbucks
Starbucks says customers are buying fall menu items in record numbers despite price increases.
Cold drinks make up about 75% of sales, with growing demand.
Starbucks is introducing new kitchen technology to make cold drink prep faster and easier on baristas.
SEATTLE — Cold drinks are now the anchor of Starbucks’ business.
Starbucks just had the best sales week in its 51-year history, interim CEO Howard Schultz announced on stage at the company’s investor day on September 13, driven by the highly anticipated release of the fall menu, including the pumpkin spice latte, pumpkin cream cold brew and apple crisp macchiato.
Sales were high despite a 4% price increase this year, putting a grande PSL between $5.45 and $5.95.
The fall menu includes both hot and iced drinks. Iced drinks now make up about 75% of Starbucks’ sales, Schultz said, and they’re particularly popular with younger Gen Z and Millenial customers, driving sales growth.
To better accommodate this demand for iced drinks, Starbucks unveiled new, faster methods of making cold brew and frappuccinos at investor day. The company is adding its new proprietary Siren System that it says will cut the time and effort needed to make cold drinks.
The Siren System includes a custom ice dispenser, milk dispenser, and faster blenders to expedite the process of making frappuccinos and other cold drinks. Starbucks says it takes just 36 seconds and 13 steps for a barista to make a Grande Mocha Frappuccino using the new equipment, compared to 87 seconds and 16 steps with the current system. The process to make a grande Pink Drink will go from 52 seconds and 11 steps to 24 seconds and 9 steps, Starbucks says.
The new equipment cuts down on some of the most labor-intensive parts of being a barista, like bending and reaching and carrying ice buckets, Starbucks says.
Cold brew is also getting redesigned. Starbucks says it currently spends about $50 million per year on the labor required to make cold brew, which includes 20 hours of brew time and 20 steps. Using the new cold pressed technology, baristas will be able to make cold brew in four steps and cut time down to a few seconds, Starbucks says. The new technology dispenses, dilutes, and chills the cold brew, which was previously all done manually by baristas.
“Cold beverage builds are increasingly complex and time-consuming, and the surge in volume has caused bottlenecks in Starbucks stores,” Chief Operating Officer John Culver told investors. Cold drinks make up about 75% of all sales, CEO Howard Schultz said at the event, and customers spend $1 billion per year on custom drink modifications, many of them on cold drinks, so minimizing complications is key.
To meet this demand, current Starbucks stores will be updated with new equipment, which will be included in new builds, senior VP of growth and development Katie Young told Insider. Some locations may temporarily close when the new systems are installed, Young told Insider. They will first undergo further testing in 2023.
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