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Starbucks Will Greatly Expand Uber Eats Partnership in the U.S.

Starbucks is expanding its piloted delivery program with Uber Eats in Miami to one-quarter of its U.S. stores by the middle of next year, the company announced at its bi-annual investor day conference.

The move highlights the coffee maker’s long-term growth strategy in its home U.S. market, which allows customers to purchase their favorite beverages in four ways: as café walk-ins; through mobile ordering; drive-thru; and via the growing Starbucks Delivers program, company COO Rosalind Brewer told shareholders, Thursday.

Starbucks also plans to expand its U.S. brick-and-mortar presence by targeting the middle parts of the country, which remain largely underpenetrated, executives said.

The Seattle-based company opened a total of 676 new stores in the U.S. in 2018, which largely accounted for a 19 percent jump in fiscal year sales of $15.3 billion. More than 300 of those new locations also included drive-thru. About half of Starbucks’ 2018 sales derived from drive-thru and mobile ordering, up 10 percent from two years prior, according to Brewer.

“There is plenty of room to grow our business, and we are doing it with discipline and speed,” she said . “At new locations where drive-thru is not feasible, we will continue to focus on delivery.”

An Even Faster Rate of Expansion in China

Increasing its store footprint in China is even more integral to Starbucks’ growth plans than it is at home. The company estimates that 80 percent of new sales profits in the country will come from new units, CEO Kevin Johnson said.

With 3,600 stores in 150 cities currently, China is Starbucks’ second largest market. The coffee chain plans to grow that number to 6,000 stores in 230 cities by 2022. That rapid acceleration will allow the company to capitalize on a “first mover advantage,” by penetrating markets with no established coffee brands presence.

Starbucks’ established delivery partnership with e-commerce giant Alibaba Group is also pivotal to growing its popularity in the country, amid new competition from local startups. In the four months since forming the partnership in August, Starbucks has increased the number of stores offering delivery from 150 locations and two cities to 2,000 locations in 30 cities. The two companies will now announce a new Starbucks virtual store on Friday, where consumers can buy merchandise, gift cards, and order coffee on Alibaba’s app.

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