Operational Challenges Faced By Starbucks And Possible Solutions

The Significance of Operation Management in Business

In the volatile business environment, it has become extremely important factor for the companies to run their internal functionality in a consistent manner. According to Christopher (2016) therefore, the corporate entities are taking intense care towards adapting multiple business improvement techniques in order to strengthen their organizational performance which is the key of securing a prominent position in the market. There lies the significance of operation management which is one of the most important areas of a company. Operation management basically deals with framing and controlling the internal process (Monczka et al. 2015). This can also be refereed as the mode of redesigning the entire business process and thereby satisfy organizational goals and objectives.

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Operation management, in its simplest form, can be considered as the way of administering the business performance and thus take action accordingly in order to run the internal operation of business with utmost efficiency. As discussed by Jacobs, (2014), with the assistance of this strategy, the quality of products and services can be improved which is very much needed to keep the customers happy and satisfied. Managing supply chain is a vital part of overall operation management which deals with appropriate flow of products and services. Hugos (2018) commended that the supply chain management also deals with proper storage and disposal of raw material, controlling the inventory in the work in process and thus ensure smooth flow of products from creation point to that of the point of consumption. Present paper aims to discuss a key operational issue, faced by a company. Starbucks will be chosen as a company. Starbucks Corporation is one of the famous coffee house chains in US, serving tea, coffee and other breakfast items among millions of customers. Founded in 1971, the company is operating their business in more than 28000 locations worldwide (Starbucks Coffee Company. 2018). Detailed discussion about the issue faced by the company in recent times will be discussed in the paper and possible solution of the issue will also be presented.     

Being the giant in the tea and coffee house chain, Starbucks is facing critical operational issue in recent times. This is creating certain restriction among them to run their business with utmost efficiency. As stated by Boonjing et al. (2015) being the global empire, the growth rate of Starbucks is utterly depressing. According to Johnson, the CEO of the company, Starbucks is facing slowest growth in terms of sales in the entire US and it is being also expected that this rate will continue to be decelerate with the passage of time. Leaving of Schultz from leadership position is one of the most significant is considered as one of the most significant reason, behind such devastating performance of Starbucks. According to Mangan et al. (2016) out of numerous challenges, mobile Order & Pay is one of the critical operational issue, faced by Starbucks in recent times. As per the complaint, launched by management of the company. New Mobile Order & Pay service is creating restriction among Starbucks to keep their customers loyal. This is the mode of allowing the customers to order the products through online. However, Brandenburg et al. (2014) argued that this mobile ordering service is leading to long line which is hampering the ability of Starbucks to deliver the products among the customer within the desired time. This is the crucial issue, which is restricting them to attract and retain the customers as delay in service is resulting in dissatisfaction among them.  

Operational Issue Faced by Starbucks

This lengthy ordering procedure is leading the company to encounter with the challenges towards retaining potential base of customer, Evidences are showing that during 2017, the company had faced more than 10% restaurant traffic in US. This rate is increasing in a drastic manner. Reports are also showing that during January 2017, the rate of traffic in US restaurant chain has been increased by 12% (Nordic.businessinsider.com. 2018).

Brand reputation of an organization plays a significant role in attract and retain wide range of customers which is the key of increasing rate of profitability. As delay in ordering is generating dissatisfaction among the customers, it is also affecting their brand regulation (Fredendall and Hill 2016). It has been reported during January 2018, that the rate of transaction has been dropped by 2%. The transaction rate is one of the most significant factor of measuring the traffic rate of customers. Therefore, based on the transaction rate, it can be said that the range if customers, being attained by the company is decreasing rapidly. Fahimnia et al. (2015) observed that the trend of mobile ordering is also affecting the performance of stores by leading huge crowd. This is also leading the customers to be away from the stores.

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Due to the numerous mobile ordering, the customers are finding themselves, highly crowded in the pick-up counter. This high traffic in the pick-up counter is restricting many customers to avoid ordering. It is true that the digital ordering platform of Starbucks is developing rapidly due to the inclusion of huge range of customers. They are now paying more to Starbucks by ordering products through mobile. Still, Wisner, et al. (2014) encountered by saying that this significance growth of the mobile ordering service is affecting the rate of sales in the coffee house chain. In the year 2018, the first quarter result of Starbucks is utterly disappointing. This is lowering their growth even in the US market. During the fiscal year 2017, the sales growth of Starbucks was merely 3%. This is the worst performance of the company in last five years. The customer traffic in US market is also flat (Nordic.businessinsider.com. 2018). As per the CEO of the company, the lack of visit of the customers to physical store is one of the most significant reason behind such devastating performance of the company. As the customers are becoming highly tech-savvy in recent times, they prefer to order the products online that that of vising physical store. Heizer et al. (2017) opined that the mobile ordering application of Starbucks is affecting the performance of more than 1000 cafes. The density of congestion is getting worse in a drastic manner. Due to the huge trend of mobile ordering, the customer who visit the physical stores are often find themselves in the long line. This creates dissatisfaction and thus obstruct them to visit the stores again. This can have a firm contribution on lowering the transaction rate. It is true that, Starbucks has implemented new system in order to track the time, taken to complete the mobile order and thereby modify the staffing level accordingly to satisfy customers, visiting the physical stores and ordering online (Pagell and Shevchenko 2014). More number of staffs are also being hired in terms of generating speed in the service which is the key of keeping the customers, happy and satisfied. However, as Starbucks is a global giant, it is imperative for them to implement proactive business strategy, which can support in solving the issue in a cost effective manner.     

Impact on Customer Satisfaction and Sales Growth

Implementation of strong operational strategy is the key factor for Starbucks as it can help them to overcome the issue and thereby promote growth in business. Coyle et al. (2016) discoursed that as the emerging trend of mobile ordering is creating problem for them to keep the physical stores durable, it is imperative for them to hire new employees who can promote speed in the services. As the customers of Starbucks are becoming highly dissatisfied in recent times, due to delay in service, the company must hire new staffs in all the section. It is imperative to generate urgency among the employees to focus on the organizational culture. The past history and durability of the company must be shared with the new staffs (Beske et al. 2014). This can support the employees in understanding the past history of the company, which is being affected by lack of speed in service.

According to Touboulic and Walker (2015), it can be said that training to the staffs is one of the most significant way, through which the service can be improve which is the key of keeping the customers in the loop. It is imperative for the HR department of Starbucks to design the training session in such a manner, which can pour the knowledge among employees about how to deal with the online order and the order, placed by customers in physical stores.

Getting feedback from the customer is the best way to improve the services. It is important for Starbucks to place a complaint box in all of their cafes and a feedback form must be given to all the customers, which is to be filled by them after using the services. This is the way, through which the perception among customers towards the product can also be understood. There also lies the significance of providing training to the employees. Based on the discussion made by Beske and Seuring (2014) it is quite evident that they must learn to behave politely with the customers. Delay in the service is the major issue, faced by Starbucks in recent times. Such delay can often lead the customers to be violated. Such situation must be handled in a very polite manner. If the staffs cannot provide timely service, they must inform the customers regarding the cause of delay and the possible time, by which the product would be delivered (Genovese et al. 2017).

Initiating collective responsibility of a company play a pivotal role in getting desired outcome. Strong action must be taken by the management of Starbucks to promote healthy coordination among a team and thereby enable them to share collective responsibility. Meixell and Luoma (2015) observed that people, having strong leadership skill must be hired in order to lead a team to appropriate direction. There are certain supply chain tools, which must be used by Starbucks in order to deliver quick services to the customers. Improvement of distribution network is one of the most imperative supply chain strategies in terms of delivering quick service to the customers. As per holistic approach, the existing distribution channel must be reviewed to measure its durability. The purchasing software must also be evaluated in order to understand its performance in the delivery system. Based on the performance, it is important to take proactive action in order to improve the distribution system.  

Possible Solutions to the Issue

Distribution strategy is also one of the integral parts of supply chain framework. With the assistance of strong and proactive distribution strategy, the corporate entities can get better idea about how to deliver products quickly. As delay in delivery is the key issue, faced by Starbucks in recent times, this strategy can serve them with the ability accelerate the customer service. Factors such as warehouse, customer, cross-docks and production facilities must be kept into consideration while designing distribution channel (Ross 2016). It is the prime responsibility of the production department of Starbucks to implement certain tactics in terms of ensuring timely delivery of product in both online and physical stores. This is the mode of keeping the customers happy and satisfied.

As per the observation of Schönsleben (2016) cash flow monitoring is another vital tool in supply chain management. It is important to track the terms and condition of payment and execute comprehensive plan in terms of using high-end technology and thereby ensure proactive money transfer. A strong payment tool must be executed. Implementation of information conduits is also a critical supply chain framework. This can be regarded as significant channel, used by the companies in order to track important data related to the flow of product. This is the way, through which the production procedure can also be controlled which is highly significant in terms of providing timely service to the customers. Dubey et al. (2017) stated that such information must be delivered to all the stores to keep them updated.            

 As Starbucks is facing major issues for delay in service, recruiting new staffs is the best way for them. Based on all the possible solutions, presented above, recruiting new staffs is the best way. This can support in promoting growth of business by integrating multiple expertise. Building service oriented workforce can serve Starbucks with the ability to deliver high quality of service in a timely and cost effective manner. It is the role of HR department of Starbucks to identify the best person who can fit in the position. Waters and Rinsler (2014) suggested that person, having strong service competency must be hired on priority basis which can have a firm impact on promoting speed in the service. One of the most competitive approaches of attracting and retaining wide range of employees is to be the most preferred employer in the entire industry. Being the giant in the coffee house chain, Starbucks should provide excellent internal support along with lucrative incentives. These are the key factors of attracting and retaining wide range of employees in the organization and thus improve the business performance. As discussed by Khalid et al. (2015) targeted job advertisement must be used by Starbucks to catch the attention of people. Starbucks should make a comprehensive job description with a proactive title. This can help the applicants to have a knowledge regarding the roles and responsibilities. Starbucks must access multiple platforms in terms of positing their job advertisement.    


After completing the entire training and development session, it is imperative for them to design the training session. This is the way, through which the quality of service can be improved. Ongoing training must be provided to the staffs in terms of accelerating the technical skill among the staffs. Martínez-Jurado and Moyano-Fuentes (2014) perceived that the interaction skill among the employees can also be improved among the employees through proactive training session. Thus, the Learning and Development Department of Starbucks must design the training session in such a manner which can support to improve the knowledge among the staffs about the way of delivering quick services. Ample number of staffs must be placed in all the pick-up counter to avoid excessive crowd and long line (Rushton et al. 2014).

Improving technical skill is the best way of keeping the personnel productive. Therefore, Starbucks must give formal education to the new people to amplify their technical skill. As the trend of ordering products online is increasing rapidly, strong technical skill will serve the staffs with the ability a make a balance between the online order and the order placed in the physical store. This is the crucial factor of avoiding excessive crowd in the physical stores. Formentini and Taticchi (2016) opined that interactive skill among the human resources play a significant role in maintaining healthy relationship with the customers. As delay in services is creating dissatisfaction among the employees and many of them are leaving the organization, it is imperative to provide the customers with proper justification of delay. Bratton and Gold (2017) indicated that there lies the significance of effective interactive skill which helps in maintaining emotional connection with that of the customers.

Starbucks must also take proactive action for empowering the employees within decision making process. As the employees, working in the pick-up counter are facing the issue, related to dissatisfaction among the customers, it is imperative to allow those staffs to share their belief and perception. This can support the management to have a knowledge regarding the situation of pick-up counter at the time of excessive crowd. Bailey et al. (2018) noted that therefore, proactive action must be undertaken in Starbucks to build a trusting relationship in between employees and management. The management of Starbucks must show trusting attitude to that of the employees and thus analyze their views and perception before taking action. This can help Starbucks in mitigating the challenges in a systematic manner.   

Training acts as a motivational factor among the employees. This is the way, through which motivation can be integrated them to perform their duty with proficiency. Therefore, it is the prime responsibility of the operational head of Starbucks to, initiate a well-defined raining program for enabling the new staffs to satisfy the requirements of customers (Hohenstein et al. 2014). Therefore, staff training is one of the most significant way of maintaining healthy coordination between the front desk and back office of the firm which is highly required for keeping the customers in the loop. Identifying effective restaurant staff is quite difficult task in recent times. Rapid development of technology is driving the corporate entities to promote growth in their internal process. Hohenstein et al. (2014) highlighted that as mobile ordering is creating huge traffic in physical stores, which resulting in delay in services among the customers of Starbucks, training will help them to improve the technical skill of the employees. This is the way, through which the huge traffic at the front desk can be avoided. Customized IT training program must be arranged to accelerate the IT skill among the employees. It is true that, Starbucks is the giant in coffee house chain, still they are also encountering with the threat from competitors like Costa Coffee, Dunkin Donuts, Café Coffee Day. Therefore, the operational issue of the company must be mitigated to get a unique position in the market. There also lies the significance of training as it can help in ensuring that the staffs are developing in a drastic manner and they will move forward promptly to satisfy organizational goals and objectives (Grant et al. 2017).

The other possible solutions are also significant for reducing organizational complexity. It is true that feedback from the customers is highly significant for understanding the fundamental needs of them and make plan accordingly for generating satisfaction among them. Still, Waddock and Bodwell (2017) argued by showing that negative feedback can hamper the public image of a company and thereby create certain restriction among them running business smoothly. As per the case of Starbucks, the rate of dissatisfaction among the customers is quite high due to the delay in service. Therefore, getting feedback from the Starbuck’s customers can generate negative vive among the new employees, which can affect the rate of profitability and thereby hamper their position in food and beverage industry (Chardine-Baumann and Botta-Genoulaz 2014).

Team in an organization play a pivotal role in sharing collective responsibility and thus running the internal functionality in a collaborative manner. However, Alftan et al. (2017) claimed by highlighting that conflict is an inevitable factor in a team due to the differing perception of members. Such conflict can hamper the consistency of inner process and create more problem for the company. The team members may disagree with the ideology of others which can lead to major disagreement. This can limit the creativity and productivity and thereby hamper the decision making process. In addition, incapability is one of the major problems of team. This affects the growth of entire team. Kurbel (2016) showed that the incompatibility leads the employees to show reluctant attitude towards joining team. This can have a negative impact on the communication level within a team. Therefore, Starbucks should not consider team building as an effective strategy for diminishing the issues, faced by them in recent times. Distribution channel is highly significant for ensuring smooth flow of products from point of origin to point of consumption. However, distribution channel can sometimes leads to lack of control of products which can hinder its quality.

 Communication is the biggest issue off distribution channel. This can make it difficult for the company to keep the customers informed regarding the products and services, offered by them, Product distribution strategy has also been suggested for Starbuck to deal with the excessive traffic in front desk. Still product distribution strategy has some major negativities. It diminishes the distribution channel for the companies and thus create complexity for them to ensure effective flow of products (Bailey et al. 2018). Therefore, it is suggested for Starbucks to conduct training session as it can help in improving organizational productivity. So, it is imperative to provide necessary service related training to the new staffs in order to keep them skillful and competent. Therefore, ongoing staff training will play a significant role for Starbucks to increase the rate of profitability of the entire organization.  

Lack of timely service is the sole issue, facing by Starbucks in recent times. Thus, it can be said that, lack of productivity among the employees is the crucial reason, behind the operational issue Starbucks. Thus, it is suggested for the company to hire new employees for amplifying their staffing level. This new strategy will serve them with the ability to meet increasing demand of the customers. They can place separate employees for different department in order to avoid any kind of overlapping (Martínez-Jurado and Moyano-Fuentes 2014). As the trend of mobile ordering is increasing in a rapid manner, hiring new employees will help Starbucks to open both online and offline counter for dealing with the online and order given in the physical store in an appropriate manner.

In addition to that, hiring new staffs will also help them to have proficient delivery boys who can provide timely service to the customers. At the same time, they can also have a strong base of staffs in all their physical outlets. This is the way, they can avoid excessive traffic in the counter and thus generate satisfaction among the employees by providing service to them in a timely and cost effective manner (Genovese et al. 2017).      

Operational issue is one the major factor for Starbucks which is hindering their public image. Being the famous company in the food and beverage industry, this issue is surely restricting the company to gather much number of customers. Therefore, recruiting new employees can help them to provide quick service to the customers which is the key of keeping them loyal and satisfied. Therefore, effective recruitment and selection process can help Starbucks to get persons, having great knowledge related to hospitality skill. At the same time, hiring will also Starbucks to avoid any kind of irrelevant circumstances in their physical stores, as it can create negative vive among both the new and existing employees.

Due to the impending operational issue is also affecting the rate of profitability of Starbucks as most of the customers are leaving the company due to delay in service. Therefore, hiring new employees can help them to integrate speed in their business and thereby attract the customers. This is the key of amplifying rate of profit margin and thus strengthening the financial base of the organization (Schönsleben 2016). Hiring new employees will help them maintain consistency in services which can have a long term benefit for the company.   

Being the business giant in global food and beverage industry, it is the prime responsibility of the higher authority of Starbucks to wrap up the issue promptly. Taking swift action can serve them with the ability to regain their image in global market. An eight weeks action plan for initiating recruitment and training program is suggested below:


Week 1

Week 2

Week 3

Week 4

Week 5

Week 6

Week 7

Week 8

Assessment of workforce need

Posting job through both online and offline

Setting recruitment budget

Screening and interviewing candidates

Conduction of personal interview

Conduction of induction round with the newly recruited people

Training session with the human resource department

Implementation of training session

Evaluating the competency level among people after the completion of training session

Table 1: Action Plan for Starbucks

(Source: as created by author)

Initially, it is imperative for the management along with higher authority to assess the fundamental need of training session. As delay in providing in providing services is the major issue, faced by Starbucks over the past few years, the need assessment will help them to explore the places, in which the new staffs should be placed. After that, they must post their job in both print and digital media. The advertisement must contain a brief job description which can help them to apply for the job after understanding the role to be performed. Recruitment is quite complicated process which comprises of multiple steps. Therefore, a certain budget must be set to run the entire process in a cost effective manner.

A comprehensive interview session must be conducted for assessing the existing skill among the employees. This is the way, through which the experience level of candidates can also be assessed. Then the HR department of Starbucks must conduct personal interview session fir assessing the interactive skill, communication skill mental strength of the candidates. It is imperative to evaluate both the results before hiring the candidates. After completing the entire recruitment and selection process, induction round must be conducted with the new employees for sharing brief organizational history, success story along with the mission, vision and objectives. Through this way, the new staffs can also have an idea regarding the market position of Starbucks. Then comes the training session. A three week training session must be initiated to pour the service related knowledge among the new staffs and this enable them to provide high quality of services. After the entire training session, the knowledge among staffs must be assessed by taking simple test. Then the new staffs must be placed at core areas.      

Conclusion and recommendation: 

Based on the discussion, it can be concluded by saying that in order to mitigate the impending issue, Starbucks should hire new employees. This is mode of attracting a strong base of customers. Due to the emerging trend of mobile ordering, Starbucks is becoming unable to provide timely services which is generating dissatisfaction among the customers. Most of the customers are leaving the company after waiting in long line. This is utterly a threat for the company as it is affecting both their public image and rate of profitability. Due to such issue, the growth rate of the company is lowering rapidly. Therefore, it is the matter of utmost importance for Starbucks to take prompt action in order to mitigate the issue. Huge traffic in the front line is generating dissatisfaction among the customers. Lack of staffs is the most significant reason behind huge traffic. At the same time, Starbucks is also becoming unable to serve the order placed by the customers in physical stores for not having ample number of staffs. Thus, it is vital for them to execute a well-defined recruitment strategy, with the assistance of which, they can amplify their staffing level and thus satisfy the changing demand of customers. Effective training program must also be initiated to strengthen the skill and competency level among the new staffs. Starbucks must recruit employees for separate department in terms of avoiding any kind of overlapping. Hiring new employees can help them to integrate speed in their internal process.

Dissatisfaction among the customers is the impending issue faced by Starbucks, it is important for them to take necessary action for keeping the customers happy and loyal. It is recommended for Starbucks to provide necessary training to the employees related to customer service technique. Starbucks should encourage both the existing and new employees to show healthy behavior while interacting with customers. The organizational culture must be created in such a manner which can inspire the employees to greet the customers in a proper manner. It is vital to establish clear policies related to dress code, attire which can have a firm impact on catching the attention of customers.

The staffs must be responsive towards the needs and requirements of customers. In case of delay in service, the staffs must information to the customers regarding the reason along with its justification. In case of any kind of control in the restaurant, the managers must be involved. It is suggested for Starbucks to execute service based practice. This is considered as the process of getting the feedback from the customers. In the case of Starbucks, the customers are constantly complaining about their delay in service. Therefore, a strong rule must be executed in all of their physical stores in order to encourage the staffs to take order from the customers within 10 minutes after being seated. A feedback or suggestion box must be set in all of their physical stores and the customers must be encouraged to give their valuable feedback. The management of Starbucks must evaluate the feedback of customers in order to explore the fundamental issue among them. The management of Starbucks must apply the action plan in accordance with the feedback of customers in order to mitigate the main issue and thereby generate loyalty and satisfaction among them.     

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