Starbucks hopes digital loyalty plus face time with in-store employees will help continue its turnaround. Earlier access to egg nog lattes and other holiday drinks — available a full week earlier than last year — won't hurt, either.
— Kristen Hawley
Starbucks admits it needs to focus on the in-store experience, but at the same time its drive-thru and mobile ordering are growing fast.
During the company’s recent earnings call, Starbucks chief operating officer Rosalind Brewer said that more than 80 percent of new U.S. stores are drive-thru, and the format will be a continued focus in the year ahead. Additionally, she said, “drive-thru, out-the-window, and mobile order and pay combined grew to more than 50 percent of the way customers are ordering, up more than 10 percentage points in just a two-year period.”
Mobile order and pay on its own accounted for 14 percent of U.S. transactions and nearly 40 percent of tender.
Regardless of the double-digit growth among customers who prefer to get their Starbucks fix from outside the store — or at least to order ahead for fast pickup — Brewer promised more “in-store improvements and tangible changes” aimed to enhance the customer experience inside stores. The company is doing this by cutting half of in-store administrative tasks for employees, freeing them up to spend more time with customers. She said that the ultimate goal is to cut two to three hours of administrative work. While testing initiatives, Starbucks has seen an average of one-and-a-half hours saved.
Starbucks has a best-of-breed loyalty program, Starbucks Rewards, which is constantly held up as an example across the industry. It grew grew to 15.3 million active members in the U.S., up 15 percent year-over-year — the strongest growth rate in seven quarters.
The company also touted 6 million digitally registered customers at the end of last quarter to 10 million at the end of this quarter. “Currently, we’re engaging with these customers directly via e-mail with offers like happy hour,” Brewer said. “But as we get to know who they are and what they want, we’ll tailor specific offers with the goal of converting them to our Starbucks Rewards program.”
“I would say that the journey with these customers has just begun,” added marketing head Matthew Ryan. “While we have broadened tremendous number, millions and millions of new digital relationships, we’ve only now just begun to use those relationships.”
“Remember that we’re not in a business of creating digital relationships for digital relationships’ sake,” he continued. “They’re an enabler for us to communicate and talk to our customers. It is a way that we go to market. And by building that capability, it allows us to be less reliant on media and to be more reliant on customers pulling information from us in the future.”
The company beat estimates on same-store sales for the quarter. Stock was up as much as 9 percent in after-hours trading.