Here’s Why Starbucks Appointed A “Chief Partner Officer”

Recently, Starbucks (NYSE:SBUX) announced that it had appointed Lucy Lee Helm an 18 year old veteran with the company as its “Chief Partner Officer.”  The company refers to its employees as “Partners” and this move comes after Starbucks is facing congestion problems due to the overwhelming success of its mobile order and pay system, adversely impacting its revenue. Training employees to handle the increased volume of orders is crucial for the company to grow comparable sales which have slowed down in the past two quarters due to this issue. However, the company’s project “North Star” aimed to refocus its approach towards customer service has met with some resistance from its employees. (Read Here’s Why Winning Its Employees Is Crucial For Starbucks’ Growth) In order to ensure that its workforce stays motivated as the company prepares itself for the next phase of growth,  a “Chief Partner Officer” can address concerns quickly and resolve issues to ensure that the customer experience is not impacted.

Motivated Employees Key Pillar For Growth

As Starbucks looks to serve a large number of customers by easing the ordering process and making it more efficient through its mobile app, a trained and motivated workforce is essential to execute this plan. According to our estimates, a Starbucks company owned restaurant serves around 475 customers every day and in a scenario where the company enters into new beverage segments, this number can grow significantly.

This metric is a key driver for Starbucks’ valuation and if the company is able to serve a high number of customers via several initiatives such as new innovative products and handling the order flow better via its mobile order system, it can lead to an upside to our price estimate. However, increasing the labor force to handle the increase in the number of orders might not be the right solution for the company since this can impact margins adversely. An optimum work force which is well trained to serve a higher volume of customers can help the company’s growth and profitability. Starbucks is known as an employee friendly company and appointment of a Chief Partner Officer indicates that the company is serious about its commitment towards employees, and is likely to take several efforts towards training and retention which will, in turn, improve customer service. We will be watching the company’s third quarter results at the end of this month mainly for its comparable sales growth to see the progress made towards resolving the congestion issue caused due to its mobile ordering platform.