When you’re Starbucks, a one percent increase in traffic and a five percent gain in same-store sales is not enough (especially when analysts are looking for a 6.2 percent bump). So, if you’re Howard Schultz and company, you look for more and better ways to drive those numbers up. The latest answer from the coffee chain in its perpetual search for growth is home delivery.
On last week’s earnings conference call, Mr. Schultz said Starbucks’ numbers reflected a decrease in traffic to malls and other retail destinations as consumers went shopping online. If fewer consumers are going to come in contact with Starbucks, the chain figures one solution is to take its beverages and foods to them. To that end, Starbucks plans to debut delivery service in select markets in the second half of next year.
Mr. Schultz said the new service will be incorporated into Starbucks’ "Mobile Order and Pay" app, which will be introduced nationwide in 2015.
"Imagine the ability to create a standing order that Starbucks delivered hot or iced to your desk daily, that’s our version of ecommerce on steroids," said Mr. Schultz. "All this will grow Starbucks Rewards, our loyalty program that now has eight million active members up 23 percent over Q4 last year and has been launched in 26 countries."
Matt Ryan, Starbucks chief global strategy officer, said the company was not willing "to tip its hand" on the specifics of the delivery plan yet, but said it "was moving full steam ahead" and would begin pilots soon. Mr. Ryan did not provide an answer as to whether Starbucks would make deliveries itself or outsource the function.
"We are going to be looking at a number of different options," Mr. Ryan said. "There will probably be a multiple number of solutions that we go with them in terms of how we operationalize this."
- Starbucks’ (SBUX) CEO Howard Schultz on Q4 2014 Results (Earnings Call Transcript) – Seeking Alpha
- Starbucks to roll out delivery service in some markets – Reuters/Chicago Tribune
Will offering deliveries grow Starbucks business? If you were advising Starbucks, would you recommend it manage the process in-house or use third-parties to deliver goods to its customers?