Starbucks Scraps AI Inventory Tool That Miscounted Items, Made Errors

Starbucks has retired its AI-driven inventory tool, Automated Counting, which was deployed across North American stores in September 2025 to address product shortages. The tool, developed as part of CEO Brian Niccol’s turnaround efforts, repeatedly miscounted or mislabeled items like milk types, leading to its discontinuation after nine months. An internal company newsletter confirmed the change, stating beverage components and milk would now be counted manually like other inventory. The AI program, provided by NomadGo, was designed to replace hand counts with automated scans using LIDAR and camera data, aiming for faster and more accurate inventory tracking. However, Starbucks acknowledged the tool’s execution fell short, with employees praising the decision to discontinue it in internal feedback. The company emphasized its commitment to consistency and execution at scale, shifting to standardized manual counting methods. Starbucks attributed the tool’s failure to operational challenges despite earlier claims in February that its adoption had improved product availability. The company now focuses on daily replenishments and supply chain improvements to ensure menu items remain accessible for customers. CEO Brian Niccol, who took over in late 2024, has prioritized technology and logistics upgrades to fix a fragmented supply chain, though recent sales growth has not yet translated to stronger operating margins. The automated counting program had been tested for years before its nationwide rollout, aligning with Niccol’s broader strategy to leverage AI for operational efficiency. While Starbucks shares have risen 24% in 2026, operating margins in North America have declined to 9.9% from 18% two years prior, reflecting ongoing challenges in balancing growth with profitability. Analysts at Morningstar previously cited AI initiatives as potential long-term drivers for labor savings and waste reduction.