April 29 (Reuters) - Starbucks ( SBUX ) will invest more in

staffing and less on equipment, including an automation system

that it previously touted, CEO Brian Niccol said on Tuesday,

breaking with a wider industry trend to rely more on technology

for store operations.

Niccol said additional staffing was critical to improving

the customer experience - his main objective since assuming

leadership in September.

"Over the last couple of years, we've been removing labor

from the stores, I think with the hope that equipment could

offset the removal of the labor," Niccol said in an investor

call. "What we're finding is that wasn't an accurate assumption

with what played out."

On Tuesday, Starbucks ( SBUX ) reported North American same-store

sales fell 1% for the fiscal second quarter ended March 30,

worse than the 0.24% drop estimated by analysts in an LSEG poll.

The company said sales in Canada returned to growth in the

quarter.

Margins at Starbucks ( SBUX ) have shrunk for five straight quarters,

falling 590 basis points in the second quarter reported on

Tuesday.

Starbucks ( SBUX ) increased its staffing levels at five stores as a

pilot since Niccol took the helm. By May, between 1,500 and

2,000 U.S. stores will have increased headcount, with around

3,000 by the end of the year.

The increased labor will add to costs, Niccol said.

"We're banking on some growth to come with the investment in

the labor and the store experience."

Starbucks ( SBUX ) will pull back from a deployment of its Siren system,

a suite of tech and equipment rolled out in 2022 intended to

streamline drink-making.

As recently as October, the company had slated the system for a

widespread roll-out, according to executives on its earnings

call. Then by January, executives said it would only be deployed

to the top-quartile of stores by sales volume.

On Tuesday, Niccol said the Siren system would only be installed

in "very targeted" stores, such as those with high drive-through

customer volumes and overall sales.

The move cuts against the trend of other large restaurant

companies, which have announced significant new investments in

technology. For example, Chipotle's CEO, who succeeded Niccol

when he left the fast food chain, said in February the company

would continue efforts at kitchen automation with an eye toward

possibly cutting labor costs.