Starbucks is speeding up innovation at its Seattle research hub

Key Points
  • Starbucks new innovation hub, the Tryer Center is speeding up innovation.
  • Since launching some six months ago, Starbucks has tested 133 unique projects at the Tryer Center.
  • More than 1,500 of its workers have come through the center to see what is being worked on or participate themselves.
  • CEO Kevin Johnson said roughly 40 projects from the hub are currently in stores in some form.
Inside the Starbucks innovation labs
Inside the Starbucks innovation labs

Inside a 20,000-square-foot facility at its headquarters in Seattle, global coffee giant Starbucks is trying something different. In a way the 48-year-old company's new innovation hub, named the Tryer Center, feels like it could be home to a start-up in Silicon Valley.

The vision for Tryer and the next wave of innovation at the brand is CEO Kevin Johnson. He has been at the helm for some two years since succeeding Howard Schultz, and is focusing hard on three strategic priorities in the U.S.: the creation of a better in-store experience, innovating its beverage platform and creating stronger digital relationships. The plan has seen success as the company just reported its third straight quarter of 4% same-store sales growth in the U.S.

"We now have 30,000 stores around the world serving 100 million customers a week, and with scale and complexity, it can become the enemy of speed. This is all about how we transform the way we work at Starbucks, so that we can accelerate the velocity of innovation," Johnson said.

At Tryer, employees are testing out new combinations for cold beverages, using rapid prototyping via 3D printer and even trying out delivery mechanisms for the company's new partnership with UberEats for delivery. They're surrounded by walls filled with sticky notes, and functional mock stores built on wheels, so they can be deconstructed and remodeled quickly. The facility is where new projects, generated by employees — known as "partners" at Starbucks — across the company's headquarters, are being put to the test, going from idea to action in 100 days.

Stephanie Lim, a senior concept engineer at Starbucks, created a single-cup brewing prototype. It's gone through 10 versions in about 30 days and will make its way into five stores in May.
Kate Rogers | CNBC

Since launching some six months ago, 133 unique projects have been tested, and more than 1,500 partners have come through to see what is being worked on or to participate themselves. Johnson said roughly 40 projects are currently in stores in some form.

Using Springboard, an online crowdsourcing platform, Starbucks partners at headquarters from every level can submit ideas, collaborate and innovate. The model will eventually be expanded to partners in the field across the country, suppliers and potentially even customers.

"We have so many partners who have deep knowledge of different parts of the business, so our job is to enable them to test them out and build them as quickly as possible," Janice Waszak, Tryer Center director, said.

Starbucks has not disclosed how much it's invested in the center or its projects. Right now 10 employees support the innovation center full time, with engineers and baristas working in the center part time.

Stephanie Lim is a senior concept engineer at Starbucks who created a single-cup brewing prototype made on the lab's 3D printer. It's a simple system that brews for two minutes, and automatically drains, making it easier for baristas to brew consistently.

Workers at Starbucks' innovation lab, the Tryer Center, are testing out new packaging for UberEats deliveries.
Kate Rogers | CNBC

"We had this idea about 30 days ago, got to our first prototype in about a week. Since then it's transformed in many ways— this is version 10," she said. It will go into five stores in May.

Another current project is the Cold Pop store, which is being used to test out new cold beverages. The store allows employees to give real-time feedback.

One project to come out of the Tryer Center's effort so far is the expansion of Nitro Cold Brew, which has been rolled out to roughly half of current stores. Workers were able to create a new system that can accommodate more store types, thus speeding up its expansion. In Starbucks latest earnings, the company called out Nitro Cold Brew as a factor helping to boost sales growth.

The Cloud Pop store is testing out new combinations for cold beverages, which have given Starbucks sales a boost in recent quarters.
Kate Rogers | CNBC

Innovation in cold beverages has gone beyond Nitro Cold Brew. Starbucks said the Cloud Macchiato, promoted by Ariana Grande, was its second-most-viral beverage campaign ever. Its Matcha beverage platform has been popular as well. Executives say cold drinks tend to sell no matter the time of year, so continuing to innovate on that platform will be key moving forward.

The company is also focused on growing its Starbucks Rewards base and new partnerships like delivery with UberEats.

"We have gone from a long-cycle innovation approach to one that embraces the mantra of going from idea to action in 100 days and then learn and adapt," Johnson said of the center. "That's all about creating the entrepreneurial spirit and by doing that, it's unleashing the passion, the creativity, and the energy from Starbucks partners to accelerate the velocity of new things that show up in our stores."

The Tryer Center was designed to have projects go from idea to action within 100 days. Here's a mock-up of a new way to format mobile order and pickup.
Kate Rogers | CNBC