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Starbucks discontinues AI tools 9 months after North American rollout
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The tool was part of CEO Brian Nicol’s campaign to solve product shortages
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The AI tool miscounted items, causing an error, Reuters reported.
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Starbucks cites need for consistency and supply chain improvements as program ends
Starbucks this week ended an AI program that employees had been using to automate certain inventory counts, nine months after implementing it at all of its North American stores, according to an internal newsletter seen by Reuters and two people with direct knowledge of the situation.
The tool was part of an effort to address the coffee chain’s chronic product shortages, which CEO Brian Nicol blames for hurting sales. The app was designed to give Starbucks more visibility into out-of-stock items in its stores, and Reuters reported in February that products were often miscounted or mislabeled, including mixing up similar types of milk or missing them altogether.
An in-house newsletter dated Monday, confirmed and verified by two employees by Reuters, stated, “From today, the automatic counting function will be discontinued.” “Beverage ingredients and milk will now be counted in the same way as other coffeehouse inventory categories.”
Starbucks told Reuters in February that the tool had improved product availability in its stores. This is one of the main measures of progress in Nicol’s corporate turnaround campaign at the store level.
In a statement to Reuters on Thursday, Starbucks said the end of the program, which covers milk and other beverage products, came from a decision to “standardize inventory counting across our coffeehouses as we continue to focus on consistency and execution at scale.” The coffee chain also said it is working to increase the frequency of daily replenishment of its stores and continuously improve its supply chain.
“Our goal is simple: If it’s on the menu, customers can order it,” the company said.
The company shared a screenshot showing employees sharing internal feedback praising the change. Another article read, “Thank you for canceling automatic counting! The idea behind it is great, but implementation has proven difficult.”
Rapid deployment in September
Starbucks quickly rolled out the tool to its North American stores in September, the company announced at the time. The AI-powered app was meant to replace manual counting of some products with automated counting, which is expected to be faster and more accurate. Cafe workers held computer tablets over shelves of syrups, milk, and other beverage products, and the app scanned them with LIDAR and camera data.
The announcement, now removed from the company’s website, said the technology would set the stage for “smarter supply chain optimization.”
A video uploaded by Starbucks at the time showed the tool failing to recognize a bottle of peppermint syrup on a shelf because it counts adjacent bottles.
Nicol, who took over at the end of 2024, has worked to repair a supply chain that current and former employees told Reuters was fragmented and hampered by outdated systems, and has also hired logistics executives.
Morningstar analysts wrote last month that they believe restaurant-level profit margins will improve over time based on “technology initiatives aimed at reducing labor time and waste, such as AI inventory tracking and operating leverage.”
AI programs have been tested for years
Nicol is relying on technology in an operations-focused turnaround called “Back to Starbucks,” which includes new AI-driven tools to queue orders and assist baristas.
The CEO is known for pushing through the turnarounds of Chipotle and Taco Bell, but he is under pressure from investors to maintain recent sales growth and improve profits that have fallen due to heavy investments in additional staff.
Although the stock price slumped in the early days of his tenure, the stock is up 24% so far in 2026.
Starbucks posted its strongest quarterly sales growth in two and a half years last month, but operating margins in its core North American market fell to 9.9% from 18% two years ago, before Nicol took the helm.
The automatic counting program had been tested for several years before Nicol inherited it and rolled it out across the country.
App provider NomadGo said in a statement to Reuters on Thursday that it is “continuously learning from customer and user feedback” to improve its product.
