Centerpiece of Starbucks recovery from COVID-induced sales dip? Digital technology

Summary

On the eve of Starbucks biennial investor day CEO Kevin Johnson highlighted the central importance of digital technology in its rebound effort. The company is predicting traffic in stores to exceed pre-pandemic levels as Starbucks reorients its operating model towards more ‘walk thru’ and seeks to leverage what COO Roz Brewer referred to as extraordinary data analytics to inform a better allocation of resources.

During a recent quarterly earnings call Johnson said Deep Brew, the new AI program, will “increasingly power our personalization engine, optimize store labor allocations and drive inventory management in stores.”

Report

Analysis

Starbucks offers a case study in digital transformation. The global coffee chain is using digital technology to squeeze out more efficiency out of staff delegating responsibilities such as inventory management, staff schedules, etc. to AI and shifting people to focus on customer service.

The company’s management of this technology will directly impact sales revenue, margins, cost savings and growth prospects, just as Cyberhedge’s ratings indicate for companies across all sectors.

Its desire to achieve ’world class in the use of technology’ in the words of Johnson makes it abundantly clear — Starbucks is a technology company that happens to sell coffee. This is a company of the future economy.

Investors should therefore be looking at how it is leveraging this technology moving forward to better understand the company’s future prospects. Cyber governance ratings provide a market-validated vantage point into this.

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