Slow security lines, lengthy waits for upscale lounges, the possibility of delays or cancellations, and the airport Starbucks are just a few of the inconveniences that travelers encounter when flying.
Long waits for their Starbucks cappuccinos, cold brews, and egg bits are something that many passengers, flight crews, and even airport staff have experienced at some point.
Coresa Barrino, a Starbucks customer at New York’s LaGuardia Airport Terminal B earlier this month, stated that they need a better system because she had been waiting for her coffee for ten minutes and counting. The nursing assistant, who was flying back to Charlotte, North Carolina, stated that she has to wait roughly two minutes to get her coffee at a Charlotte Starbucks.
The coffee chain’s new CEO, Brian Niccol, who joined Starbucks from Chipotle in September, has taken notice of the lengthy wait times and is determined to win back customers and turn around the company’s declining revenues.
Niccol informed investors that he believes licensed locations—like those found in Target stores or airports—are eager to adopt the business’s return to Starbucks strategy.
During the company’s quarterly conference call on October 30, Niccol stated, “I think there’s 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.”
This week, amid among of the busiest travel days of the year, Starbucks airport location employees and corporate technology will be put to the test. Over 3 million individuals will be inspected at U.S. airports on Sunday, December 1, which could be the biggest day of the year, according to the Transportation Security Administration, which predicted a record number of travelers throughout Thanksgiving week.
Congestion in airport security lines, lounges, and gates is a result of the increase in flight travel, particularly during holidays like Thanksgiving. The federal government and airlines are working to address these issues. For the airline sector, airport Starbucks bottlenecks are merely another indication of high demand and congested airports.
According to the U.S. Department of Transportation, a record 1.05 billion individuals boarded aircraft traveling to, from, or between U.S. airports in 2023, just surpassing the number in 2019 prior to the pandemic.
Struggles and fresh approaches
Starbucks has been having trouble lately. In the quarter that ended on September 30, its sales declined for the third consecutive quarter as customers resisted price increases and disregarded marketing campaigns like energy drinks and discounts meant to attract new customers. In the United States, same-store sales fell 6% from the previous year.
Niccol announced plans in late October to improve customer experiences and boost sales. These proposals included reducing the menu, removing costs for dairy alternatives, and reintroducing condiment bars.
One of his main objectives is to reduce wait times. He hopes to get service times down to four minutes, which will shorten wait times and enhance the clientele’s experience.
Additionally, even though Starbucks began offering mobile order and pay at its airport facilities in 2022, the shift occasionally makes things more confusing and chaotic at the cafe counter rather than better. Additionally, some tourists may not be frequent Starbucks users who have the app installed.
At a time when the company most needs it, improving the coffee chain’s airport locations might increase sales and improve the brand’s reputation. Even Starbucks’ lost consumers may stop by an airport outlet while on the road.
Starbucks and other restaurant businesses have an opportunity to increase revenue as a result of people returning to their destinations after the pandemic.
According to the most recent Federal Aviation Administration data, concessions make up around 4% of airport revenue in the United States each year, yet they are a valuable resource for many travelers who don’t have much time or energy to refuel before a flight.
Jennifer Simkins, the associate vice president of concessions at Dallas Fort Worth International Airport, stated that the airport’s food and beverage outlets’ revenue is increasing more quickly than the number of passengers. According to Airports Council International, the airport rose from 10th place in 2019 to become the third busiest in the world for passengers.
In certain instances, airlines are operating larger jets and adding extra seats to their aircraft.
According to Ursula Cassinerio, an assistant vice president at Moody’s Ratings who focuses on airports, eateries may get packed during peak hours due to the increased number of passengers per plane and the limited space.
She pointed out that a lot of airports have been building new terminals or doing significant renovations. “If you have more square footage for restaurants and retail, that means more revenue opportunities,” she said.
According to statistics from market research firm Technomic, travelers may choose from an average of 80 food and beverage brands at the 25 largest airports in the United States.
Licensing model
The fact that licensees, not Starbucks, run its airport outlets presents a problem for the company.
In 1991, Starbucks built its first airport outlet at Seattle-Tacoma International Airport, which serves Starbucks’ hometown, in collaboration with licensee HMSHost.
Through an exclusive agreement with Starbucks, HMSHost managed the chain’s airport locations for almost thirty years, progressively expanding its airport footprint to almost 400 outposts.
However, HMSHost terminated the agreement in 2020, allowing the operator to provide airports with additional coffee options.
The vast majority of Starbucks airport cafes are still run by HMSHost, but other operators have recently tried their hand at it, including Paradies Lagardere and OTG.
Requests for comment for this story were not answered by OTG, Paradies Lagardere, or HMSHost.
According to Mark Kalinowski, restaurant analyst and CEO of Kalinowski Equity Research, airport locations are complex because they can generate significant revenue, but they can also be quite difficult to operate at times.
Starbucks avoids the difficulties of running an airport business, including staffing issues, expensive rent, and security checks, by licensing its locations. Additionally, the spike in demand at an airport can be even more unpredictable, even if the coffee chain is accustomed to dealing with a surge of undercaffeinated consumers in the mornings.
According to Kevin Schimpf, head of industry research at Technomic, when a plane lands, there are suddenly 100 people present when there were previously none.
Starbucks loses revenue from those restaurants with licenses as a result.
As of September 24, the corporation operated more than 16,300 stores across the United States. However, it only owns and operates roughly 60% of those cafes; the remainder are handled by licensees. According to Starbucks, that figure includes its cafés in 47 of the 50 busiest airports in the United States. The business did not tell CNBC how many airport stores it now operates.
Licensed stores generated $4.51 billion, or 12%, of Starbucks’ sales in fiscal 2024. According to business papers, Starbucks only receives licensing fees from those locations, a portion of monthly sales through royalties, and compensation for providing licensees with its coffee, tea, and food.
Sara Senatore, an analyst at Bank of America, believes that Starbucks makes roughly 7 cents for every dollar spent in a licensed location before interest, taxes, depreciation, and amortization. In a September research report, Senatore stated that company-owned stores earn roughly 23 cents for every dollar spent.
Starbucks stated in the risk factors section of its most recent annual filing that the company’s brand could suffer if its business partners and outside suppliers take a break.
According to Kalinowski, the great majority of patrons are unaware of whether the Starbucks is owned by the firm or has a license. All they want is their Starbucks. They want it made correctly. They want it fast. Additionally, because they are attempting to reach their gate, they are under increased stress.
To speed up lines, airports have begun implementing more technology in their dining establishments.
For instance, labor issues have resulted in an increase in kiosks and tablets within airport eateries.
It s 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, Schimpf said.
Laurie Noyes, vice president of concessions and commercial parking at Tampa International Airport, said that sometimes the airports are a little bit behind the street. But she said the airport has made strides in offering more digital options and now, travelers can order food ahead of time viaUberEats, and pick it up at airport restaurants.
Dallas Fort Worth offers DFWOrderNow, a website and platform available at digital kiosks so travelers can order food ahead. Simkins said the airport s platform will reroute Starbucks customers to Starbucks own platform. Starbucks offers more than 170,000 possible drink orders, according to the chain s website. We just found the value in keeping the familiarity for their customers, Simkins said.
Simkins said the airport is developing robotic technology for delivery to speed up service. It s also experimenting with offering meal and retail bundles from airport restaurants and shops, she said, so passengers no longer have to plan their route for multiple stops in an airport.
A local coffee company, Fort Worth, Texas-based Ampersand, plans to open a robotic barista at DFW s Terminal C, Simkins said. It will be available 24/7, to accommodate flight crews arriving at off-hours.
Simkins said popular chains still draw a crowd.
There are some brands that people will line up for, she said.
For Barrino, who was waiting for her coffee at LaGuardia, Starbucks is one of those companies.
I just really love the brand, she said.
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