Air travelers face a host of headaches on their journeys: slow security lines, long\u00a0waits\u00a0for plush\u00a0lounges, the threat of\u00a0delays\u00a0or cancellations \u2014 and the airport\u00a0Starbucks.<\/p>\n
Many travelers, flight crews and even airport employees have at some point encountered long wait times for their Starbucks cappuccinos, cold brews and egg bites.<\/p>\n
\u201cThey need to have a better system,\u201d said Coresa Barrino, a Starbucks patron at New York\u2019s LaGuardia Airport Terminal B earlier this month who said she had been waiting 10 minutes and counting for her coffee. The nursing assistant, who was taking a flight back to Charlotte, North Carolina, said the wait when she buys her coffee at a Starbucks in Charlotte is about two minutes.<\/p>\n
The long waits have caught the attention of the coffee chain\u2019s new CEO,\u00a0Brian Niccol, who\u00a0joined\u00a0Starbucks from\u00a0Chipotle\u00a0in September, pledging to\u00a0win back customers\u00a0and reverse the company\u2019s sales slump.<\/p>\n
Niccol told investors he thinks that licensed locations, such as those inside\u00a0Target\u00a0stores or airports, are interested in following the company\u2019s\u00a0strategy\u00a0of \u201cgetting back to Starbucks.\u201d<\/p>\n
\u201cWhen I think about the airports and such, there\u2019s such a huge opportunity for us to simplify some of the execution there so that we get people the great throughput that they want so they can get on their way,\u201d Niccol said on the company\u2019s quarterly conference call Oct. 30.<\/p>\n
Starbucks\u2019 airport location staff \u2014 and company technology \u2014 will be put to the test this week during some of the busiest travel days of the year. The Transportation Security Administration forecast a record number of travelers during Thanksgiving week and said Sunday, Dec. 1, could be the busiest day of the year, with more than 3 million people screened at U.S. airports.<\/p>\n
The surge in air travel, especially during peak times such as Thanksgiving, has led to congestion in airport security lines, in lounges and at\u00a0gates\u00a0\u2014 problems that airlines and the federal\u00a0government\u00a0are trying to\u00a0fix. For the aviation industry, bottlenecks at airport Starbucks are just another sign of soaring demand and overcrowded airports.<\/p>\n
A record 1.05 billion people boarded airplanes going either to, from or between U.S. airports in 2023, narrowly topping the total in 2019, before the pandemic, according to the U.S. Department of Transportation.<\/p>\n
Starbucks has recently struggled. Its\u00a0sales fell\u00a0for the third straight quarter in the period ended Sept. 30, as consumers pushed back against higher prices and ignored initiatives such as discounts and energy drinks aimed at bringing customers back. Same-store sales in the U.S. declined by 6% from a year earlier.<\/p>\n
In late October, Niccol unveiled plans aimed at improving customers\u2019 experiences and reviving the company\u2019s sales, from bringing back condiment bars, to eliminating surcharges for\u00a0dairy alternatives\u00a0and cutting down the menu.<\/p>\n
Cutting wait time is a key goal: He wants to trim service times down to four minutes, which would shrink long lines and improve the customer experience.<\/p>\n
And while Starbucks started rolling out mobile order and pay to its airport locations in 2022, the change can sometimes add to the confusion and chaos at the cafe counter instead of resolving it. Plus, some travelers might not be regular Starbucks customers who already have the app downloaded.<\/p>\n
Improving the coffee chain\u2019s airport outposts could boost both sales and the brand\u2019s reputation during a time when it needs it most. Even the customers Starbucks has lost might visit an airport location while they\u2019re traveling.<\/p>\n
With travelers returning in\u00a0droves\u00a0after the pandemic, it gives Starbucks and other restaurant chains a chance to boost sales.<\/p>\n
Concessions contribute about 4% of U.S. airport revenue annually, according to the latest available Federal Aviation Administration\u00a0data, but they\u2019re an important feature to many passengers, who have limited time \u2014 and, often, energy \u2014 to fuel up before a flight.<\/p>\n
At Dallas Fort Worth International Airport, revenue from food and beverage outlets is growing faster than passenger numbers, said Jennifer Simkins, the airport\u2019s assistant vice president of concessions. The airport has become the world\u2019s third-busiest for passengers, up from 10th place in 2019, according to Airports Council International.<\/p>\n
Airlines are also packing more seats on their aircraft and in some cases are\u00a0flying larger jets.<\/p>\n
More passengers per plane means restaurants can become crowded during peak times with more customers waiting to be served and space limited, said Ursula Cassinerio, an assistant vice president at Moody\u2019s Ratings who covers airports.<\/p>\n
She noted that many airports have been undergoing major renovations, if not building new terminals. That means \u201cmore opportunities for revenue if you have more square footage for retail and restaurants,\u201d she said.<\/p>\n
The 25 busiest airports in the U.S. have an average of 80 food and beverage brands as options for travelers, according to data from market research firm Technomic.<\/p>\n
A challenge for Starbucks is that licensees \u2014 not Starbucks itself \u2014 operate its airport locations.<\/p>\n
Starbucks opened its first airport location with licensee HMSHost in 1991 at Seattle-Tacoma International Airport, which serves Starbucks\u2019 hometown.<\/p>\n
For nearly three decades, HMSHost operated the chain\u2019s airport locations through an exclusive deal with Starbucks and gradually grew its airport footprint to roughly 400 outposts.<\/p>\n
But in 2020, HMSHost ended the deal, giving the operator flexibility to offer more coffee options to airports.<\/p>\n
While HMSHost still operates the overwhelming majority of Starbucks\u2019 airport cafes, more operators, such as Paradies Lagardere and OTG, have since taken a swing at it.<\/p>\n
HMSHost, Paradies Lagardere and OTG did not respond to requests for comment for this story.<\/p>\n
\u201cAirport locations are tricky because they can make good money, but operationally, at times, they can be very challenging,\u201d said Mark Kalinowski, restaurant analyst and CEO of Kalinowski Equity Research.<\/p>\n
Licensing its stores saves Starbucks the hassles of operating inside an airport, such as staffing problems, high rents and security checkpoints. And though the coffee chain is used to handling a surge of undercaffeinated customers in the mornings, the swell in demand at an airport can be even more erratic.<\/p>\n
\u201cA plane lands, and all of a sudden there\u2019s a hundred people when there were zero people there before,\u201d said Kevin Schimpf, director of industry research for Technomic.<\/p>\n
The trade-off is that Starbucks makes less money from those licensed restaurants.<\/p>\n
The company has more than 16,300 locations in the U.S. as of Sept. 24. But it only runs about 60% of those cafes itself; licensees operate the rest. That number includes its cafes in 47 of the 50 busiest airports in the U.S., according to Starbucks. The company did not disclose its current airport store count to CNBC.<\/p>\n
In fiscal 2024, licensed locations accounted for 12% of Starbucks\u2019 revenue, or $4.51 billion. From those stores, Starbucks collects only licensing fees, a percentage of monthly sales through royalties, and payments for supplying its coffee, tea and food to licensees, according to company filings.<\/p>\n
For every dollar spent in a licensed store, Starbucks generates about 7 cents of earnings before interest, taxes, depreciation and amortization, according to estimates from Bank of America analyst Sara Senatore. Company-owned stores make about 23 cents per dollar spent, Senatore wrote in a research note in September.<\/p>\n
If its business partners and third-party providers slack off, Starbucks\u2019 brand could be damaged, the company noted in the risk factors section of its latest annual filing.<\/p>\n
\u201cThe vast majority of customers, they don\u2019t know whether that is a company-owned Starbucks or a licensed Starbucks,\u201d Kalinowski said. \u201cThey just want their Starbucks. They want it made properly. They want it quickly. And they\u2019re in a situation of heightened stress because they\u2019re trying to get to their gate.\u201d<\/p>\n
Airports themselves have been adopting more technology in their restaurants to help move lines along.<\/p>\n
Labor challenges have led to more kiosks and tablets inside airport restaurants, for example.<\/p>\n
\u201cIt\u2019s harder and harder to staff a lot of these restaurants, so any front-of-house savings that you can make by having consumers order on kiosks or tablets or whatever, that really, really helps,\u201d Schimpf said.<\/p>\n
Laurie Noyes, vice president of concessions and commercial parking at Tampa International Airport, said that \u201csometimes the airports are a little bit behind the street.\u201d But she said the airport has made strides in offering more digital options and now, travelers can order food ahead of time via\u00a0Uber\u00a0Eats, and pick it up at airport restaurants.<\/p>\n
Dallas Fort Worth offers DFWOrderNow, a website and platform available at digital kiosks so travelers can order food ahead. Simkins said the airport\u2019s platform will reroute Starbucks customers to Starbucks\u2019 own platform. Starbucks offers more than 170,000 possible drink orders, according to the chain\u2019s website. \u201cWe just found the value in keeping the familiarity for their customers,\u201d Simkins said.<\/p>\n
Simkins said the airport is developing robotic technology for delivery to speed up service. It\u2019s also experimenting with offering meal and retail bundles from airport restaurants and shops, she said, so passengers \u201cno longer have to plan their route for multiple stops\u201d in an airport.<\/p>\n
A local coffee company, Fort Worth, Texas-based Ampersand, plans to open a robotic barista at DFW\u2019s Terminal C, Simkins said. It will be available 24\/7, to accommodate flight crews arriving at off-hours.\u00a0<\/p>\n
Simkins said popular chains still draw a crowd.<\/p>\n
\u201cThere are some brands that people will line up for,\u201d she said.<\/p>\n
For Barrino, who was waiting for her coffee at LaGuardia, Starbucks is one of those companies.<\/p>\n
\u201cI just really love the brand,\u201d she said.<\/p>\n<\/p>\n
Air travelers face a host of headaches on their journeys: slow security lines, long\u00a0waits\u00a0for plush\u00a0lounges, the threat of\u00a0delays\u00a0or cancellations \u2014 and the airport\u00a0Starbucks. Many travelers, flight crews and even airport employees have at some point encountered long wait times for their Starbucks cappuccinos, cold brews and egg bites. \u201cThey need to have a better system,\u201d […]<\/p>\n","protected":false},"author":0,"featured_media":12591,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-12590","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business"],"_links":{"self":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/12590","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/comments?post=12590"}],"version-history":[{"count":0,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/12590\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media\/12591"}],"wp:attachment":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media?parent=12590"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/categories?post=12590"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/tags?post=12590"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}