Starbucks Wants to Cut $400 Million in Software Costs. Toast Investors Should Pay Attention.

Anders Bylund, The Motley Fool

Mon, July 13, 2026 astatine 10:33 AM CDT 5 min read

Starbucks (NASDAQ: SBUX) has decided it tin physique amended bundle than Microsoft (NASDAQ: MSFT) and IBM (NYSE: IBM). If thing else, it wants to prevention costs with a homemade mentation of immoderate high-priced endeavor bundle platforms.

That is either visionary cost-cutting oregon a lawsuit survey successful firm hubris waiting to happen.

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According to an interior Starbucks presumption reviewed by Bloomberg News, the java concatenation is processing AI-powered tools to regenerate a Microsoft inventory-tracking strategy and an IBM attraction absorption platform. Starbucks spends astir $400 cardinal a twelvemonth connected software, and Chief Technology Officer Anand Varadarajan told employees determination are "clear opportunities to trim the spend."

The marketplace took notice. Microsoft fell 2.4% and IBM dropped 5.2% arsenic the Bloomberg nonfiction was published connected Thursday morning. Starbucks roseate much than 3% connected the perchance cost-saving news. Toast (NYSE: TOST) shares enjoyed a short-lived 2.3% spike astatine the aforesaid time.

The "we'll conscionable physique it ourselves" signifier

Every institution goes done this. The bundle bills heap up, idiosyncratic successful the C-suite discovers that AI tin constitute codification now, and abruptly the concern program includes "proprietary level development."

But easier to physique does not mean easier to maintain. Enterprise-scale systems necessitate ongoing information updates, integration work, and dedicated engineering headcount. Starbucks precocious gave up connected an AI-powered inventory tracking strategy and reverted to manual plus counts. That's a stark reminder that interior improvement comes with its ain failures and costs.

To beryllium fair, Starbucks has the standard and resources to propulsion this off. The expansive cost-cutting program aims to slash yearly costs by much than $2 billion, and bundle is conscionable a tiny portion of this effort.

The semipermanent question is whether companies that prosecute in-house AI builds volition yet question retired modern, vertically integrated platforms erstwhile the attraction load rears its disfigured head.

That's wherever Toast comes in.

Toast is playing a antithetic crippled

Toast operates a cloud-based level for restaurants that combines point-of-sale hardware, outgo processing, and operational software. Wherever information oregon bundle is progressive successful moving a azygous edifice oregon a full chain, Toast has integrated that contented into its broad system.