Starbucks Shares Slip Despite Best Sales Week, New AI Inventory Tool

Starbucks is facing growing competition in New York from Luckin Coffee, a Chinese brand known for efficient mobile ordering, inventive flavors, and competitive pricing, which appeals to younger consumers and is expanding near former Starbucks locations. Despite this challenge, Starbucks is pursuing technological improvements to enhance operations, including a new AI-powered inventory management system that reduces counting time by 75% and helps prevent stock shortages, potentially improving margins and customer experience. The company recently reported its "best-ever sales week" in the U.S., driven by the popular fall drink lineup, although investor enthusiasm remained muted with shares slipping. CEO Brian Niccol has emphasized technology and operational efficiency as part of a broader turnaround strategy, including supply chain innovations and scaling back U.S. production hours to reduce costs. Meanwhile, Starbucks suppliers are struggling with tariff-related costs, impacting margins, and the ongoing unionization efforts among Starbucks workers add complexity to the company's labor relations amid these operational changes. Overall, Starbucks is balancing competitive pressures, operational upgrades, and labor challenges as it seeks to maintain market position and improve financial performance.