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4 lessons restaurants can learn from Starbucks recent mobile stumble

Starbucks Mobile Order & Pay app
Source: Starbucks

The popularity of Starbucks' mobile ordering and pay app hampered sales last quarter, but the coffee giant isn't likely to be the only restaurant chain that will stumble as it adopts the promising technology.

Mobile order and pay apps promise more convenience for customers and restaurant staff alike. However, few chains are equipped to deal with patrons speeding through the checkout.

For Starbucks, mobile transactions spiked throughout its U.S. stores last quarter, with 1,200 of its locations experiencing a 20 percent jump in mobile pay and ordering during peak hours. The company disclosed that the increase in user volume and crowding at pickup stations caused incoming customers to leave without making purchases.

"The restaurant industry in general, and even quick service restaurants, have really been impacted by a slowdown in visits," Warren Solochek, president of NPD Group's food service division, told CNBC. "So, the fact that Starbucks could drive that number of additional visitors to their units is great. It's a nice problem to have. More quick service restaurants would like to have that problem."

Starbucks has begun brainstorming its own solutions to ease the bottlenecking, but restaurant analysts and consultants have their own suggestions.

Hire and train new staff

"I think the bigger issue for Starbucks is they need more baristas and more equipment," Darren Tristano, president of Technomic, told CNBC.

Starbucks managers across the U.S. have employed additional staff members and redeployed already-hired employees to assist with the congestion. Long term, however, analysts suggest that this move could be a costly one.

With labor prices going up, Solochek said that many restaurants may look to hire employees to cover only during peak hours instead of for full shifts.

"That kind of demand does not exist all day, just at certain times," he said, noting that shorter shifts are not desirable roles for job seekers and employee turnover could become an issue.

Restaurants will have to train new employees and retrain already-hired staff to work differently. Clark Wolf, founder and president of Clark Wolf Co., a consulting firm, said that these changes could be "very destructive" for restaurants and not just financially.

"There are a lot of downstream changes," Julie Ask, principal analyst at Forrester, told CNBC, explaining that chains will have to completely rethink food preparations and in-store delivery methods.

Reconfigure stores

Employment and training strategies aren't the only things restaurants will need to reimagine. Ask noted the physical space of each store will need to be updated and reconfigured.

Starbucks is already working to devise solutions to its congestion issues in stores. CEO Howard Schultz said that several Starbucks designers were in Seattle last week working on plans for future Reserve stores and bars and would also tackle the bottlenecks.

Schultz noted the company will look to redesign future stores and remodel older shops to adapt to this new payment structure.

"Separate pay and ordering stations and likely a mobile order pickup area will provide some relief for the staff and customers," Technomic's Tristano said.

Reconfiguring thousands of stores is no easy feat and it's certainly not cheap. However, the investment could be worth it for chains.

"Mobile order and pay is being adapted full-scale across the restaurant and food service industry," Andrew Feinberg, a principal analyst at Deloitte, told CNBC, explaining that more and more consumers are gravitating toward these payment options.

Upgrade technology and payment options

"Restaurants have to become e-commerce companies," Ask told CNBC, explaining that these companies need to adopt new technologies and alter the traditional restaurant business model.

Many chains have already begun to integrate a variety of payment methods into operations including Apple Pay and Android Pay, as well as in-house mobile payments. However, there is no way of capping the number of digital orders that restaurants receive.

"In a restaurant or even a cafe setting generally you are limited to the orders created from the number of seats or line that forms in the store," Andre Neyrey, CEO of Blackwood Hospitality, told CNBC. "When faced with an unlimited number of orders at the same time just handling them could create issues or bottlenecking. This also affects customers in line as well because it could slow the staff down serving them."

Starbucks said mobile alerts could be used to alleviate overcrowding and will test this feature in the future. This addition may not be enough to solve the problem.

Tristano suggested that "orders have to be staggered so the kitchen can manage pace without negatively impacting the customer experience."

Leverage loyalty programs and data

In addition to payment options, more and more restaurants have adopted loyalty programs as a way to drive consumers to make repeat purchases.

Restaurants like Chipotle Mexican Grill, Starbucks and Dunkin' Donuts have differentiated from other restaurants with their strong loyalty programs, which have helped increase foot traffic to their chains.

Deliotte's Feinberg said that there is a strong connection between mobile order and pay and loyalty programs. Many brands integrate mobile payment options into their loyalty apps in order to gain more users.

However, Ask noted that while these restaurants are gathering a lot of data on their consumers, companies still aren't leveraging it yet.

"They need to figure out what their real demand is," Ask said, explaining that this data could help restaurants better predict peak purchasing hours and demand for specific products. These insights could be instrumental and alleviating congestion caused by the mobile payment apps, she said.