About a month ago, I was in NYC for a conference and as I normally do in the morning, I wanted Starbucks. My order is basic, a Venti iced coffee (black… like it should be) but despite this rather easy order, at times I could be waiting for a while to enjoy the delicious coffee… I mean there are a lot of people in New York that need coffee. Fortunately, with the Starbucks App, I have the ability to place my order from the comfort of my hotel room then wonder down to the nearest store to pick it up. No lines and no wait. A wonderful example of how technology improves customer experience and, at the end of the day, drives business.
I’ve always been impressed with the ways Starbucks incorporates technology into diverse aspects of their business; from the developments they have made in their app to how agile they can be in changing menu items and pricing based on market feedback. However, it wasn’t until I attended Microsoft Build last week that I got a real look into how Starbucks is using data analytics and technology across all aspects of their business.
With over 100 million weekly customers turning to Starbucks to get their coffee fix, Starbucks has partnered with Microsoft to provide a data-driven approach to enhancing experiences in the store, providing consistent quality and providing transparency into their supply chain.
Here are the cool things they were showcasing in their booth.
Prescriptive recommendations backed with reinforcement learning
The first thing that Starbucks showcased at Build is how they plan on enhancing the drive-thru experience by incorporating prescriptive recommendations into their drive-thru menu. Starbucks has been doing prescriptive recommendations for a while in their mobile app, but they are expanding the application of their technology to the drive-thru. Gerri Martin-Flickinger, Starbucks Executive Vice President and CTO explained how store location, season, time of day, weather and what has already been ordered are factored into the recommendations someone is offered when they approach the drive-thru. Located in their booth at Build was a demo drive-thru menu that the team used to show how recommendations changed based on previous decisions. 
In the demo, the group ordered a sweetened Iced Frap and from that, the machine then suggested a sweet treat to accompany it. It might seem logical, but its a pretty cool thing to get accurate food recommendations just from ordering a drink.
The other significant thing about this new technology is that it is tied to store inventory. No more ordering Ham and Cheese Sous Vide Egg Bites only to find out they are out of stock when you go to pay… I LOVE IT (both the technology and the Egg Bites). Right now, this is only in beta, but from what I have been told, Starbucks plans to start pushing this capability out to locations soon.
To make this work and to eventually be able to scale it to thousands of stores, Starbucks has partnered with Microsoft and has leveraged Azure Machine Learning to create what they call their “Deep Brew” ML platform.
Incorporating IoT into the coffee process
Walk into any Starbucks and you will see some heavy duty coffee equipment brewing thousands of cups of coffee a day. From coffee machines to grinders and blenders, each Starbucks location has over 12 pieces of equipment that are operational for the majority of the day. Two things come to mind when I think about the role the equipment plays in the overall Starbucks experience:
1) If a piece of equipment goes down, a store will have to pay a lot for immediate repair costs or risk lower customer satisfaction and may lose revenue.
2) How can a company with thousands of stores maintain proper consistency and a high level of output that its brand requires?
To address both of these thoughts, Starbucks has yet again turned to data analytics to improve upon its processes. Through their partnership with Microsoft and by leveraging Azure Sphere, Starbucks has turned its machines into IoT devices that create dozens of data points. The data being collected from the individual machines has allowed Starbucks to ensure a level of standardization and quality in all of their products. From 
being able to see the water temperature being used to brew the coffee to the pressure for its espresso pumps, corrective action can be taken if a machine is not operating within its intended parameters. On top of this, Starbucks has begun to build predictive maintenance models based on the IoT data to predict when a machine might either go down or need to go into maintenance. This technology will allow them to proactively ship replacement parts, or machines to a store in order to limit downtime and prevent angry customers and loss of revenue.
Showcasing the journey of a bag a coffee with blockchain
The last of the three things Starbucks was showcasing at Build revolved around providing transparency into their supply chain; most specifically around tracing the journey of the beans from farm to cup. Their idea is to leverage technology to connect the people who drink the coffee with the people that grow it.
Through their mobile app, Starbucks is developing a feature that allows users to scan the barcode of their package of coffee and receive information immediately around where the beans were grown, where they were roasted, the route they took to get there, where it was packaged and more. Additionally, Starbucks provides information around what it’s doing to support farmers in those locations. This is pretty powerful information for users to have in the modern, connected world. The transparency that Starbucks is providing will continue to not only grow their business but be one of the leading ethical companies out there. I did a study on Starbucks for my MBA and was blown away with some of their humanitarian and ethical initiatives. I see this as an extension of that powered by Microsoft’s Azure Blockchain Service. Thanks Starbucks!
You can learn more here about Starbucks’ latest innovations and what was shown at Build
You can also check out this video where I interviewed Jeff Wile, SVP of Retail Infrastructure to get his take on these really cool initiatives
I was really blown away with the cool things that Starbucks is doing in this space and until Build, didn’t know that Microsoft was the partner that is powering this. I am pretty bullish on the portfolio that Microsoft has developed to help companies like Starbucks accomplish incredibly impressive things. Great story, great coffee (Do I get coffee for life now?)
Go grab a cup of your favorite and check out some of the other cool ways Microsoft and Starbucks are working together.
-Brett
