Starbucks pulls AI inventory system after repeated store errors
Starbucks shut down NomadGo's AI inventory system after nine months of failures. It confused oat milk with dairy milk. Stores are returning to manual counting.
Summary
Starbucks pulled its automated inventory counting system from North American stores. An internal newsletter on May 19 was direct: "Starting today, Automated Counting will be retired." The program lasted nine months. Affected categories return to manual counting.
In practice
NomadGo's system used tablets with cameras and LiDAR sensors to count stock including syrups and milks. It confused similar-looking products and missed items entirely. Reuters documented the errors in February. The system's own launch video showed it failing to identify a peppermint syrup bottle placed next to other products.
Context
The program was part of CEO Brian Niccol's "Back to Starbucks" strategy. Niccol took over in late 2024 to fix persistent supply chain failures. The rollout was fast: September 2025, all of North America. Problems followed quickly. Operating margins have fallen from 18% to 9.9% over the past two years. Starbucks maintains other AI programs, and Morningstar analysts still count on them to improve profitability.
Why it matters
- The errors were documented in February. The decision to retire the system came in May. Three months of known failures before acting.
- Confusing oat milk with dairy milk is not a niche error — it is a core ingredient in most menu drinks.
- The system's own launch video showed a failure. Starbucks released it anyway.
- NomadGo says it is "continuously learning from customer and user feedback." Its most public customer has already left.