Starbucks’ inability to keep its U.S. stores consistently supplied with basic items such as milk, pastries and cup lids has been blamed by four CEOs over the past five years for lost sales. Current chief executive Brian Niccol has made addressing these stockouts a headline part of his turnaround agenda. But interviews with 10 current and former Starbucks corporate employees, several of them senior managers, together with company statements and internal materials, indicate the shortages are rooted in systemic issues that go beyond recent executive attention.
Employees described a supply environment hampered by a diffuse supplier base, antiquated computing platforms and a string of attempted fixes that have fallen short. Reuters reviewed video evidence of errors in the chain’s newest automated counting application and examined photographs supplied by baristas that show episodes of overstocked shelves and excess shipments. Starbucks said it is modernizing systems, strengthening demand forecasting and making its distribution network more agile, and that these efforts are beginning to raise product reliability for partners and customers.
Delivery performance and the scale of the problem
Supply chain experts say a central gauge of reliability is how often delivery trucks arrive on schedule and carry the full quantity of products intended for distribution centers - the company-owned facilities that feed stores. Industry guidance cited by one nonprofit executive places the acceptable target at 95% or better; results materially below that level are taken to signal dysfunction.
According to two former employees with direct knowledge of Starbucks’ operations in early 2024, fewer than one-third of truck deliveries to Starbucks distribution centers were unloaded on schedule and included the full complement of milks, pastries and other goods. Staff involved in logistics pointed to Starbucks’ challenges in coordinating the large number of suppliers from whom it sources products as a fundamental driver of late and incomplete shipments. Two other former employees said such problems persisted into at least late 2025.
Those operational shortcomings have shown up in the company’s top-line performance. Since Niccol became CEO in September 2024, Starbucks’ share price has risen roughly 5% - better than a 1% increase in Reuters’ U.S. Restaurant Index over the same period but trailing a 26% gain in the S&P 500 Index. Starbucks’ U.S. sales had fallen for six consecutive quarters prior to the company’s most recent earnings report in October, when domestic sales were flat. Niccol is scheduled to present his investor strategy on Thursday, following earnings released on Wednesday.
How miscoordination cascades through the chain
Employees at both corporate and store levels described a cascade of problems that begins with inaccurate forecasts of what individual locations will require. Those errors can produce two opposites: warehouses that are overfilled with items that stores do not ultimately need, and store shelves that go empty of items customers expect. Café workers and corporate staff who spoke on condition of anonymity said the result is frustrated customers who cannot complete orders and managers who must choose between ordering too little - risking out-of-stocks - and ordering too much - risking costly waste.
Consultants note that restaurants face a delicate balance: maintaining availability without creating excess inventory, because food waste hits already narrow profit margins. One consultant described the situation as a tightrope to walk.
Niccol has tried several operational measures to blunt those dynamics. He has given store managers expanded discretion to order supplies from distribution centers, altered the Starbucks mobile app so customers can see when baristas report shortages, and hired experienced logistics executives to bolster the company’s capabilities. Notable among the hires is Anand Varadarajan, appointed chief technology officer after previously leading supply chain operations for Amazon’s grocery business.
New technology, mixed results
One of Niccol’s highest-profile technology initiatives is the rapid rollout of an "automated counting" tool designed to speed and improve visibility into store inventory. Announced in September, the application uses LIDAR and camera data captured by tablets held up by café staff to scan shelf contents for syrups, milks and other beverage items. The intent is to replace slower hand-counts with automated measurements that produce more timely, actionable information.
Ten café workers and managers who have used the app described frequent miscounts and mislabels. They reported the system can confuse similar milk varieties or fail to detect some items entirely. In one video Starbucks posted that Reuters reviewed, the application did not recognize a peppermint syrup bottle while counting nearby bottles. The app’s vendor, NomadGo, states on its website that it is "99% accurate." NomadGo told Reuters its goal was to modernize counting so it would be faster and less burdensome while giving timely data on product availability. Starbucks, for its part, said adoption of the app had led to improved product availability in stores but did not quantify the improvement.
Independent observers and consultants questioned whether the automated counting rollout was sufficient absent broader changes. Brittain Ladd, who has advised grocery and delivery platforms and spoke at length with a Starbucks supply chain executive after a recent hire, said the company needs a more fundamental reworking of its supply operations and described the counting tool as a band-aid rather than a cure.
Attempts by prior leaders and the risks of partial solutions
Niccol is not the first chief executive to confront these issues. Former leaders also flagged replenishment and inventory availability as problems. In 2021, then-CEO Kevin Johnson told investors the company was making progress on pandemic-era inventory challenges. By 2023, Laxman Narasimhan, who led the company for roughly 18 months before Niccol’s appointment, repeatedly cited shortages during earnings calls as a reason customers sometimes do not complete orders.
Narasimhan pursued a path that leaned on machine learning to automate stores’ ordering from distribution centers. That automated ordering system, developed in partnership with o9 Solutions, used ongoing predictive models to refine anticipated store-level sales. Employees said the system tended to recommend too few items, leading to gaps. In late summer 2024, Narasimhan launched an experiment called "Never-Out," which selectively tested larger shipments to some stores. That initiative, which has not been previously reported, was rolled back about eight weeks later after Narasimhan was removed and Niccol took over. Niccol subsequently scaled back the automated ordering system shortly before Starbucks’ Fall promotion last year and restored ownership of inventory decisions back to coffeehouse teams so they could manage availability.
Starbucks said in a statement that it had returned "ownership of inventory to coffeehouse teams so they can manage availability." The company also stated it is modernizing systems and replacing older platforms to improve product availability and deliver a consistent customer experience.
Fragmented suppliers and the limits they impose
Former warehouse employees and other staff pointed to the scattershot nature of Starbucks’ supplier base as another enduring constraint. Rather than relying predominantly on a small number of large suppliers able to scale rapidly when demand spikes, Starbucks sources many food products from smaller, regional vendors that can struggle to increase output quickly. "Starbucks never cultivated the relationships with large suppliers that it needed," said one former worker.
That scattering of sources stretches into packaging: executives disclosed in a 2023 earnings call that the company manages roughly 1,500 cup-and-lid pairings from different vendors. Former employees said the lack of standardized packaging inhibits automation efforts for store-level inventory counts, because cameras and scanning software struggle to identify items when packaging varies across suppliers. Those same employees noted Starbucks has been able to use automated counting in China but not at scale in the U.S. because of inconsistent vendor packaging.
Legacy systems and the cost of modernizing
Starbucks’ technology stack for processing store inventories and resupply orders also attracted sustained criticism inside the company. Staffers described the core architecture as effectively the same system the company adopted in 1997 when executives publicly lauded the IBM AS/400 system for mission-critical operations. Nearly three decades later, employees in the technology organization said Starbucks was still operating on what they consider the same architectural foundation.
Company spokespeople confirmed the firm is replacing platforms such as the AS/400 with more advanced technology as part of a modernization effort to improve product availability. But employees warned that migrating away from long-standing systems would be costly and complex. One staffer used a metaphor: changing the engine of an airplane while it is flying.
Storage constraints, food growth and waste
Another dimension of the company’s supply challenge is physical: typical Starbucks cafés have limited back-of-house storage, a constraint that differs from many fast-food peers that maintain larger storerooms. Starbucks evolved from a beverage-focused layout to a business that also sells substantial food, and employees said the original store designs did not anticipate the scale of that food growth.
According to Starbucks regulatory filings cited by employees, food as a share of company revenue grew from 15% in 2005 to 23% in 2025. That expansion of the food business, staffers said, meant more perishable items in stores with small storage capacity. The result: when forecasts overshoot or shelf space is insufficient, stores often discard or donate unsold items.
Employees gave a recent example from around September, shortly after Niccol curtailed the automated ordering system ahead of a Fall promotion. Stores temporarily received glut shipments of bacon sandwiches, apple croissants and other seasonal foods across the U.S., according to café workers and corporate employees. Reuters reviewed six photographs that appeared to show overstocked products. The Food Bank for New York City confirmed it saw a rise in donations of unsold Starbucks food that month. Jake Domey, a unionized barista in Danbury, Connecticut, said that one night he threw away three garbage bags of food - the most he had seen in 13 years at the company. "It was an astronomical amount of waste," he said.
Where the fixes stand today
Starbucks management has described a multi-pronged program of system upgrades, improved forecasting and distribution changes aimed at getting the right items to the right coffeehouses each day. Niccol has emphasized empowering store-level teams, refining mobile-app reporting of shortages, and hiring experienced supply-chain talent, including a new chief technology officer and other logistics leaders.
Still, employees who have observed or participated in the company’s efforts said implementation problems persist. Problems with automated counting software, supply fragmentation, legacy computing architecture and limited store storage together continue to produce the twin problems of out-of-stocks and surplus waste. Company statements assert improvement but do not always quantify how much reliability has increased.
For investors and market watchers, the operational issues translate into tangible performance considerations: share price gains since the leadership change have been modest versus broader market indices, and U.S. sales momentum has shown only recent stabilization after multiple quarters of decline. Niccol is expected to outline further strategic moves to investors in scheduled presentations that follow the company’s earnings disclosures.
Summary of findings
- Starbucks’ U.S. supply problems are persistent, affecting basic items such as milk, pastries and cup lids across thousands of stores.
- Delivery reliability was reportedly poor in early 2024, with fewer than one-third of truck deliveries to distribution centers arriving on time and complete, according to former employees.
- Efforts to automate inventory counting with an AI-enabled tablet app have produced miscounts and mislabels; the app’s vendor claims 99% accuracy, while café staff report frequent errors.
- Earlier automated ordering systems and short-lived initiatives like "Never-Out" were rolled back; management has since returned inventory decision-making to store teams.
- Fragmented sourcing, including about 1,500 cup-and-lid pairings from different vendors, complicates standardization and automation.
- Core technology built on legacy architectures such as AS/400 remains a barrier to comprehensive modernization.
- Limited café storage, growth of food as a revenue category and poor forecasting can lead to both empty shelves and excessive waste.
Key points
- Operational reliability remains a central constraint on Starbucks’ U.S. sales recovery, and efforts to fix it combine organizational, vendor and technological challenges.
- Modernization efforts include both new hires with logistics experience and deployment of AI-enabled counting tools, but early rollouts have produced mixed results.
- Impacted sectors include restaurants and food service broadly, as well as supply chain technology providers and logistics operations.
Risks and uncertainties
- Ongoing supply disruptions could continue to depress U.S. sales trends and customer retention in the restaurant sector if product availability does not materially improve.
- Large-scale replacement of legacy systems would be costly and complex and could introduce transitional disruptions if not carefully managed, affecting both technology and operations teams.
- Persistent dependence on many smaller, regional suppliers that cannot rapidly scale production could limit the company’s ability to respond to demand spikes, increasing the likelihood of either out-of-stocks or wasteful overstocking in food and perishable categories.
Conclusion
Fixing Starbucks’ supply chain will require addressing several interlocking problems: rationalizing a scattered supplier base, replacing decades-old core systems, calibrating forecasting and ordering algorithms, and adapting store formats to a larger food business with more perishable inventory. Company executives say work is underway to modernize platforms, strengthen forecasting and make distribution more agile, and Niccol has made inventory reliability a central metric of his turnaround plan. But employees who have watched previous initiatives and participated in recent rollouts warned that piecemeal changes and imperfect technology deployments will not on their own restore consistent availability across thousands of U.S. cafés.