Soft US foot traffic during peak pumpkin spice latte season and an anemic outlook for sales have Starbucks investors worried. The company is trying a bunch of things to try to kickstart business, like opening a new set of premium cafes. But its biggest bet is on its mobile technology and new strategies to boost customer convenience.
In the second half of 2015, Starbucks will roll out food and beverage delivery service in selected markets.
“Imagine the ability to create a standing order at Starbucks, delivered hot or iced to your desk daily,” CEO Howard Schulz said on yesterday’s earnings call. “That’s our version of e-commerce on steroids.”
Details on the program were scarce, with chief strategy officer Matthew Ryan calling it “early days,” and indicating that the company is looking at a number of different options for how to fulfill orders.
The company will also launch a mobile order and pay in Portland, Oregon, in December, which will link the company’s mobile ordering app with payments so customers can order and pay in advance, skip the line, and just drop by to pick up the order. This system will go nationwide in 2015.
The company’s research suggests that it will boost check size, traffic, and overall speed in stores.
It all sounds pretty aspirational. Starbucks stores can be pretty chaotic during the morning rush, and it’ll be difficult to handle a flood of advance mobile and delivery orders at the same time. Also, hot and iced beverages aren’t exactly tailor-made for delivery– they don’t hold up over time very well, and aren’t bicycle friendly. And the company’s food options aren’t so popular in stores that they can be expected to drive big delivery sales.
But the company has proven doubters wrong before by succeeding in an area where others struggle—mobile payments. In 2013, 90% of the $1.3 billion in mobile payments in the US took place in a Starbucks store. But with brick and mortar commerce as $4.2 trillion, there’s still a lot of room for mobile to grow. As Schulz explained on the earnings call:
That’s why every tech and financial service company in the world is chasing the mobile payment opportunity. Yet while these companies may have vast hardware and software development capabilities, and this is the key point here, Starbucks is the only local, national, or global business of any kind to succeed in crossing both the most difficult and the most critical chasm standing between success and failure in mobile payment: transforming consumer behavior.
But for Starbucks, being on the leading edge needs to translate to growing sales.