Starbucks tries upscale digital menus to fight post-lunch slump

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(March 8): Starbucks Corp, facing flagging growth in the U.S., is testing digital menu boards to boost sales, especially for the slower afternoon period.

The chain has installed the new menus in a handful of U.S. locations. There are also digital menus in some Starbucks airport stores.

A newly remodeled cafe in Chicago’s Loop has a large, six-panel digital menu that shifts throughout the day. On a recent afternoon, it featured an image of tomato basil soup and a grilled-cheese sandwich, along with Nitro cold brew coffee and macchiatos. The board also highlights Starbucks’ Mercato food line — such as a seared-steak sandwich for US$7.95 — which is part of the company’s mission to get customers to think of Starbucks as a fuller dining option.

After disappointing sales in the Americas region last quarter, Starbucks is feeling pressure to find success with new formulas. Chief Executive Officer Kevin Johnson noted “some softness in the afternoon” during the period. In response, he said the chain will focus on improving customer service during that time, and push popular after-lunch beverages — iced coffee, tea and cold brew.

“We are focused on elevating the Starbucks experience in the afternoon,” he said.

The new menus may help Starbucks promote certain afternoon offerings, as well as create a sleeker, more modern ambiance for customers hanging out to check email and chat. The monitors can switch out features depending on season, and quickly change prices.

Resurgent fast-food restaurants are pushing discounts heavily, and this may be biting into Starbucks’ business. McDonald’s Corp has been advertising US$2 McCafe coffee drinks, and Taco Bell is promoting US$1 snacks such as nachos and caramel-apple empanadas.

BTIG analyst Peter Saleh said McDonald’s might be hurting afternoon sales for both Starbucks and Dunkin’ Brands Group Inc, underscoring the need to try new methods.

Starbucks “can be more aggressive,” Saleh said, referring to the new displays. “They can be more on point and on message, with what they want to say.”