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Starbucks to test mobile ordering app to speed checkout times

March 13, 2014

Starbucks is updating its iPhone app (Android to come) to give cardholders easier access to their account information as well as adding digital tipping and "shake to pay" features. While all this is very nice, the most interesting mobile news coming from the chain involves an app test that the company is not discussing publicly in great detail.

According to a Bloomberg News report, the coffee chain is "actively working" on a mobile app that will allow customers to place their orders before getting to the store or while waiting on the line inside a Starbucks.

"It's something our customers have asked for," Adam Brotman, chief digital officer, told Bloomberg. "We’re not revealing a lot of details about it now." He did reveal, however, that CEO Howard Schultz was directly involved in the project.

Starbucks is not alone in pursuing mobile ordering. Chipotle, McDonald's, Subway and Taco Bell either have mobile ordering apps in place or are testing them. The biggest question is how restaurants and stores will deal with an influx of orders during busy periods. "It's still so early on," Linda Mills, a Starbucks spokesperson, told Bloomberg Businessweek. "There are a lot of operational considerations that have to be factored in."

FINANCIALS:     [NASDAQ:SBUX] [ NYSE:MCD] [ ]

Discussion Questions:

Will mobile ordering apps become commonplace with foodservice operations in the near future? How will these apps affect in-store/restaurant operations?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

How common will mobile ordering apps become in foodservice operations in the next five years?

Comments:

Starbucks continues to be on the leading edge of customer-friendly service and technology. I am anxious to know more about what the new app will do, and how it will be improved from the current app which already is far more high-tech and convenient than any other retail business app.

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David Biernbaum, Senior Marketing and Business Development Consultant, David Biernbaum Associates LLC

If this means the people in line that are ordering a drink that takes 20 words to describe and three minutes to make can get through the line faster, I'm all for it. However, the attractiveness of the app diminishes when customers go to get their drink and it is no longer hot enough to their taste or is found to be wrong and a discussion takes place while others are waiting.

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Steve Montgomery, President, b2b Solutions, LLC

Mobile ordering will become commonplace in foodservice. Yes, there will be a learning curve that could be fraught with bumps, but this is the way of the future. Consumers hate waiting in lines. If retailers can adapt their ordering and delivery systems to mobile, it can be a win/win situation.

With the rise of mobile ordering apps, retailers will need to focus more on filling orders, rather than taking orders. This could impact where employees are assigned and, in the case of restaurants, the number of machines dedicated to making food and beverages.

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Max Goldberg, President, Max Goldberg & Associates

Customers are asking for them, and they will become more common. Customers hate standing in line, and these apps have the potential to reduce perceived wait time (and possibly actual wait time).

There are still a lot of challenges to be worked out, so I'm eager to see Starbucks User Experience.

One of the challenges is perceived fairness. A critical pillar of any queuing system is that the customers place in line will be treated fairly. (Think about your own blood-pressure when someone in front of you cuts in line) If users perceive that mobile pre-ordering is a way to cut in line then it will be a real problem. (Especially if the ability is limited to certain smartphone platforms, etc...). However, if its perceived as a benefit of customers being proactive (Southwest Airlines queueing system), or Loyalty (United Airlines Zone boarding system), then it clearly can work.

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Jason Goldberg, VP Commerce Strategy, Razorfish

As a heavy user of the Starbucks app, my reaction to this is FINALLY.

Starbucks is already doing a good job in providing a seamless experience for its users. For instance, I love that I can check and reload my balance by using the app, going online, or when I'm at the store.

So to me, the ability to place orders using the app is like the cherry on top of a great, ominichannel sundae (or should I say Frappuccino).

Retailers--even the ones that aren't in the food/beverage industry--can definitely learn a lot from Starbucks.

And yes, I do think this trend will become more commonplace in the future. Some people are already calling restaurants to place orders in advance, and I think consumers will welcome an app that lets them do just that without having to dial the phone and speak to someone.

Francesca Nicasio, Retail Expert and Author, Vend

Gee, this is nice. Gee, this is very cool. Gee, this will work on my phone! Everything has to be mobile, right?

The problem in placing the order at Starbucks isn't a problem. I don't see scanning your phone to identify your order at the time of checkout or even giving it to Starbucks in advance any real advantage to the one or two cup customer.

Same, same. The time savings of scanning your phone versus placing the order yourself is negligible. It adds one more piece to the queue process. Does it get your drink faster? Likely not. The end result could be a cold drink when you expected a hot drink.

There is one thing that Starbucks is absolutely. They are the epitome of "Have it your way" that began with Burger King decades ago. They make it "Your way" every time. Does giving them your order in advance make getting it "Your way" faster? No. What it will do is make you feel cool and distract you from the typical wait time necessary to get it "Your way." That's not to mention waiting for the person in front of you in the drive-thru that ordered six, three sentence drinks and food items.

Feeling good, feeling cool, feeling up with the technology is all part of Starbucks. It might make you feel better, feel cool, but how will you feel about a cold cup of coffee or a negligible time savings in the experience? That, however, is not what this is about.

'Scanner'

This is indeed a trend and it was explored in a cover story in the latest issue of COLLOQUY titled "When Dining, Please Leave Your Cell Phone ON."

In addition to Starbucks, a number of chains, including Chipotle, Dunkin' Donuts, Jersey Mike's, Red Robin and Sonic, now offer mobile payment options.

Across all industries, U.S. mobile payments are expected to increase eight-fold from 2012 to 2017, to $90 billion from $12 billion, according to Forrester Research.

The increased presence of payment apps introduces vast opportunities for loyalty programs that adopt them, because they provide added insights that enable merchants to create more spot-on, real-time offers affordably. The trick will be delivering offers of contextual relevance in an increasingly crowded field while not being invasive - and not just for QSR chains. Quick-serve restaurants may be leading the way in mobile payment and loyalty integration, but all merchants - retailers in particular - can learn some lessons from their QSR cousins on how to use payment apps to effectively bolster a loyalty initiative.

Read the full COLLOQUY article, including "Five Tips for Creating Loyalty Through Mobile Payments" here.

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Bryan Pearson, President and CEO, LoyaltyOne

The short answer is YES. We will start to see our smart phones being used for all types of things. We already have the ability to buy merchandise from retailers, so why not be able to order food? I have an app on my phone that allows me to order food at a sporting event. We're seeing apps that will become our virtual wallets. We haven't even begun to scratch the surface of what we'll be able to do with that little device (our phone) we carry with us in our pockets, purses, etc.

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Shep Hyken, Chief Amazement Officer, Shepard Presentations, LLC

There are a lot of challenges including menu complexity, designated pick-up time, placement of food for pickup, in-store processes, etc. that have to be addressed. And only major chains will be able to integrate mobile ordering systems with their POS/in-store ordering system. (Some popular mobile/online ordering systems send a fax and/or email to the restaurant once the order is received.) But for a certain segment of food service this could help to drive additional business and differentiate them from the competition.

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Larry Negrich, Vice President, Marketing, nGage Labs

Mobile ordering apps will likely become popular for frequent users (especially during the morning rush hour) at Starbucks and comparable locations. It's already commonplace for restaurants through sites like Seamless. However, there are elements that could restrict it from becoming as popular at coffee and sandwich shops due to the types of goods being sold.

Most beverages sold at Starbucks are hot, making the time the beverage is ready and when the customer ultimately arrives all the more important. As well, we've all heard the special, complex orders from regulars; this could add a layer of difficulty versus the assurance customers get when they are able to directly speak with the barista. But beyond these operational components it will be interesting to understand how it impacts complementary purchases at the register; will those who ordered ahead be as likely to purchase a muffin spur-of-the-moment when they've already placed their order through the app?

Peter Askew, Exec director of strategy, Clear

It should be commonplace. While I might be willing to pay $3 for a cup of coffee, I'm not willing to spend more than five minutes waiting for it to be ready. Mobile ordering will not only streamline operations but it also has the potential of increasing the volume of take-out sales in the QSR category.

Starbucks is the perfect store to test and refine this process, it has dedicated customers with almost intimate knowledge of the menu. I'm looking forward to the app.

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Carlos Arámbula, Managing Partner, MarcasUSA LLC

My wife is a power-user of Starbucks and it's VERY user friendly app, and the many ways it rewards her loyalty. I suspect she'll love this new benefit and I count on Starbucks' astute work in this area to ensure the proper beverage temperature and freshness upon pickup.

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Mike Osorio, Senior VP Organizational Change Management, DFS Group

Saving time in line will prove a greater motivator for mobile app adoption than payments. (Now there's a proposition.)

If the premise of mobile ordering is to save time, then the restaurants who will benefit the most are those with the most "wait" to lose. (Now there's rationale.)

Forget coffee. As Scanner points out, the time savings is negligible. Think big, long waits, like pizza carryout. Or Chinese to go. (Now there's use cases.)

But habits are hard to break. Whether waiting in line or ordering in at home, people are more likely to continue to do what they always do: read their smartphones while they wait or order at home. (Now there's apps for those, too.)

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Dan Frechtling, Vice President, Global Product Management, hibu, PLC

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