Artificial intelligence is changing more than just the way baristas work or how they interact with customers. It is now also making its mark behind the scenes in the technological operations of the largest restaurant chains. One example is Starbucks, which, according to internal information, is re-evaluating its long-standing strategy for purchasing enterprise software and is increasingly relying on in-house development supported by AI.
According to its Chief Technology Officer, Anand Varadarajan, the coffee giant spends approximately $400 million a year on software alone. This figure is one of the reasons why the company has begun reviewing virtually all its technology contracts and looking for opportunities where in-house solutions could replace suppliers’ applications.
However, according to Varadarajan, it is not just about cost savings. Generative artificial intelligence is fundamentally changing the economics of software development. What, just a few years ago, required large development teams, months of work, and significant investment can now be achieved by smaller teams much more quickly. Starbucks is therefore reopening a question that companies had long considered settled—whether it is more advantageous to purchase software from external suppliers or to develop it in-house.
Starbucks is already working on developing its own systems for inventory management, which are set to replace Microsoft’s solution, and for managing the maintenance of its outlets, where it currently uses an IBM platform. At the same time, the company has been developing its own point-of-sale system for several years, which could replace Oracle Symphony in the future. Tools utilising artificial intelligence play a significant role in the development of new applications, helping developers write code, test new features, and significantly speed up the entire process.
This change is part of a broader plan by Chief Executive Brian Niccol to reduce the company’s costs by $2 billion. The technology department alone aims to save around $30 million in this financial year, with approximately a third of that coming from software licences.
However, Starbucks’ change in strategy extends beyond the coffee chain itself. Until recently, it was common practice for restaurants, hotels, and café chains to purchase off-the-shelf solutions from specialist suppliers. Generative AI, however, is beginning to change this approach. If software can be developed more quickly, more cheaply, and more precisely to meet the needs of a specific business, other large hospitality groups may well follow suit. The result could be a significant shift across the entire hospitality technology market—from off-the-shelf products to solutions tailored to individual brands.
This is where the significance of Starbucks’ current move lies. It is not just about saving hundreds of millions of dollars on software, but about signalling that artificial intelligence is changing the very rules of technological development. And if this model proves successful, it could influence the way restaurant and hotel companies think about their technology in the coming years.
Source: Starbucks
