Nicole Smith

ISM 3011

Professor Reichgelt

2 May 2021

Starbucks’ Success Using Big Data and Business Intelligence

Starbucks was once a small, local coffee located in Seattle’s Pike Place Market, and now

the Starbucks corporation is a worldwide coffee empire. According to Statista, Today Starbucks

has approximately 31,000 stores worldwide, serves over 100 million customers a week, and

earned $26.5 billion in revenue in 2019. The recently described coffee shop is now being

referred to as a data tech company, with teams dedicated to research data, data science, and

analytics. As stated by Jon Francis, Starbucks’ senior vice president of data analytics, “Becoming

data-driven has always been about more than just convenience, and ‘how do we sell more

product?’ It’s about using these digital tools to elevate the analog human experience.” Starbucks

now collects data from customers, stores, coffee machines using technologies like the cloud, AI,

and blockchain. Because Starbucks has grown significantly since 1971, it is to no surprise they

have invested greatly in data analytics. In this paper, I will highlight the many way Starbucks

uses big data and business intelligence to further their company’s success.

Because data plays a large role in Starbucks’ recent successes, Starbucks’ has specific

jobs assigned for Head of Global Strategy, Analytics, and Insight in their executive leadership

team. Starbucks strategically analyses data in regard to consumer demographics, average income

levels, traffics patterns, population density, and more. Analyzing this huge collection of daily
data, gives Starbucks insight into planning locations, expansion of product channels,

personalized promotions, pricing strategies, and product development.

While Starbucks stores are seemingly everywhere, Starbucks is extremely strategic when

it comes to real estate planning. Starbucks partners with Atlas; Atlas is a location-analytics and

business intelligence platform developed by Esri (Environmental Systems Research Institute).

According to Digital Innovation and Transformation, “Starbucks has 20 analytics experts around

the world analyzing maps and geographic information systems data, but also empower regional

teams to give input on location, store design, and other issues.” Data from platforms like Atlas

helps Starbucks to analyze maps and potential new store locations by using data on population

density, average annual income, and traffic patterns. From data like this, Starbucks can predict

economic feasibility and profitability of potential locations.

Starbucks has a sophisticated internal artificial intelligence platform called Deep Brew.

Deep Brew helps take the stress of processing inventory, replenishing inventory orders, and

supply chain logistic off of employees giving them more time to focus on creating the ‘Starbucks

Experience’ for each and every guest. Not only does Deep Brew track inventory, but it can also

predict how much of a product may be needed for specific times, such as holidays. Deep Brew

also helps Starbucks’ managers to keep track of employee hours, predict schedule and staffing

needs, and create schedules. Deep Brew’s collects data from espresso machines regarding

temperature, bean type, shot quality. Deep Brew also collects data that predict before various

equipment like espresso machines, blenders, and ovens will need maintenance. Having this

information helps Starbucks to lower maintenance costs and enhance store functionality.

According to Jon Francis, Starbucks’ SVP Data Analytics, “In many ways, Deep Brew, and the

focus on machine learning and AI, is all about finding ways to help humans have more time to be
human. It’s not about robots replacing humans. It’s about technology that frees up our baristas to

better connect with one another and connect with customers.” Starbucks CEO Kevin Johnson

also stated,” Deep Brew will increasingly power our personalization engine, optimize store labor

allocations, and drive inventory management in our stores.

The Starbucks Rewards Loyalty Program is available to all customers, new or returning,

thorough the Starbucks app. The Starbucks app is created and hosted in the cloud and currently

has approximately 19.3 million active members as of October 2020. The Starbucks Loyalty

Reward Program has not only greatly strengthened customer loyalty, but it also provides

Starbucks with valuable demographic data for each customer. The Reward Program also allows

for Starbucks to retrieve data that tracks customer purchasing behaviors and see when, what, and

where a customer purchased products. According to CNBC, a current Starbucks employee

stated,” We know from experience that when customers join our rewards program, their total

spend with Starbucks increases meaningfully.” Customers benefits from using the app by

receiving rewards for their purchases, being first to know about new and seasonal products

releases, and order ahead and skip lines, easily pay in store or online. Additional benefits for

Starbucks Reward Loyalty members include free refills for brewed coffee, a free birthday

beverage, and double star reward days. According to Starbucks, in October of 2020 the

Starbucks Rewards Loyalty Program accounts for 24% of their total orders.

From the Starbucks Rewards Loyalty Program, data is analyzed, allowing for Starbucks

to send personalized promotions and recommendations directly to a customer’s mobile device.

These recommendations are based on pervious purchases, popular selections, weather, inventory

of a local store, and even time of day. As stated to CNBC by a current Starbucks employee, “Our

Industry-leading digital platform will further differentiate us from the competition over time.”
By using personalized promotions, Starbucks is directly targeting millions of customers through

their app and significantly increasing profits.

Starbucks has successfully invested in and build teams dedicated to data analytics,

creating great value for both the company and customers. Data analytics, research data, and data

science teams at Starbucks have used data information as a business strategy tool to further

connect with their customers. The once small coffee shop turned global firm, has displayed how

the use of their innovative technology and data-driven business strategies have increased sales,

efficiency, customer satisfaction and loyalty. Starbucks’ customer centric approach has been

crucial to their success, so it will be interesting to see how Starbucks will integrate that approach

while advancing their technological business strategies. How will Starbucks cope with the

decrease in human interaction, as many other companies worldwide are replacing their

employees with AI and robots? It’s possible that customers will prefer an automated process

purely because of convenience. It’s also possible that customers will appreciate, more than ever,

a personal experience connecting with their local baristas. As individuals are becoming more

consciously aware of their personal impact on the environment, its likely Starbucks might be

considering a more environmentally friendly approach to their packaging. Starbucks has clearly

demonstrated their continuing success in using big data and business intelligence to enhance

quality of product and services, increase productivity, and increase customer and employee

satisfaction.
 Work Cited

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Thau, Barbara. “How Big Data Helps Chains Like Starbucks Pick Store Locations -- An
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