Starbucks Ditches Big Tech for AI-Powered Software Makeover
Starbucks is embarking on a massive cost-reduction initiative that includes building its own artificial intelligence tools to replace software it currently buys from tech giants such as Microsoft and IBM. The coffee chain aims to reduce its reliance on legacy technology providers by developing in-house software, which will significantly trim expenses amid a larger $2-billion corporate turnaround plan.
The company spends around $400 million annually on software, with the goal of cutting costs through this digital pivot. Starbucks is using AI-assisted coding to develop in-house software, aiming to replace its Microsoft inventory-tracking system and IBM maintenance-management tool. This move coincides with a massive turnaround effort at Starbucks, which is also attempting to trim $2 billion in total corporate costs.
The technology overhaul comes as the company's global store growth has dropped to its lowest level on record. The coffee chain is actively pushing its engineering workforce to integrate artificial intelligence into their daily tasks, even linking AI utilization directly to employee performance bonuses. According to internal communications reviewed by Bloomberg, AI-assisted coding was instrumental in designing the new platform meant to replace the IBM maintenance tool.
The rollout of this proprietary software could occur as early as the end of next year. Retail sentiment on Stocktwits was 'bullish' with 'high' message volumes, with SBUX stock gaining about 3% on Thursday and on track to end its best day in over two months.