Does Starbucks have a big delivery opportunity?
At its investor day on Thursday, Starbucks said that, in a partnership with Uber Eats, the chain will roll out home delivery to nearly one-quarter of company-owned stores in the U.S. by the end of the second quarter.
Starbucks has been exploring delivery for years and tested a program in Seattle in 2015 with Postmates. The renewed push comes as McDonald’s recently partnered on delivery with Uber Eats. Yum Brands, owner of Taco Bell, KFC and Pizza Hut, has partnered with Grubhub on delivery as well.
Starbucks Delivers program launched three months ago in China with the promise of delivery of hot and cold drinks within 30 minutes or less. Done in partnership with Ele.me, the delivery unit of Alibaba, and its three million registered delivery riders, the program has reached 2,000 stores across 30 cities in China.
Starbucks has further pilots underway in both Tokyo and Miami with Uber Eats.
For the China rollout, Starbucks created spill-proof lids, tamper-proof packaging and containers that support hot and cold items. Starbucks CEO Kevin Johnson told CNBC that some drinks may be unsuitable for delivery, such as a cappuccino, because of likely foam overspill. Mr. Johnson said, “We were very thoughtful about this.”
The launch comes as Starbucks is facing slowing traffic to its domestic stores.
Writing for the Wall Street Journal, Julie Jargon noted that, although many chains say delivery reaches customers who don’t want to dine out, delivery fees on small orders can irritate consumers. She also said Starbucks may be challenged delivering “quickly and while still hot — something that could be particularly problematic for coffee.”
- Starbucks Outlines Growth Agenda and Announces Expansion of Starbucks Delivers in U.S. and China at 2018 Investor Conference – Starbucks
- Starbucks cuts long-term earnings per share forecast; shares fall – CNBC
- Starbucks to Offer Coffee Delivery Across U.S. as It Seeks to Reach More Customers – Wall Street Journal
- Starbucks partners with Uber Eats, will expand coffee delivery service to nearly 2,000 U.S. stores – Geekwire
- Starbucks delivers – RetailWire
DISCUSSION QUESTIONS: Do consumers want coffee to be delivered to their homes and offices? Will the biggest challenge for Starbucks likely be more about executing delivery or stimulating demand?