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Starbucks order ahead

Starbucks said today that usage of its mobile order-ahead feature doubled year-over-year during the most recent quarter.

starbucksorderaheadThe company’s Mobile Order & Pay program first launched in Portland more than a year ago and allows customers to skip the line by ordering in advance from their phone. The feature went live across the entire U.S. in September, covering more than 7,400 stores, and is also being tested in Canada and the U.K.

There are now 8 million mobile order-ahead transactions per month, Starbucks said. That’s a 33 percent spike from the most recent quarter.

“Mobile Order & Pay continues to be increasingly embraced by customers,” Starbucks President Kevin Johnson said today on the company’s earnings call.

Mobile order-ahead transactions represented 4 percent of all Starbucks purchases last quarter in the U.S., which is up 40 percent from the previous quarter. In the company’s 300 busiest stores, that percentage grows to 10 percent of all transactions; at peak busy times, the number increases to nearly 20 percent, Johnson said.

In Portland, where the feature was first introduced, transaction volume from order-ahead purchases was up 150 percent from last year.

Starbucks Presdient Kevin Johnson shows the new Starbucks prepaid card at the company's shareholders meeting last month.
Starbucks Presdient Kevin Johnson shows the new Starbucks prepaid card at the company’s shareholders meeting last month.

“We are just beginning to see the full benefit of Mobile Order & Pay, beyond the speed and convenience it offers to customers and partners,” Johnson said.

Adam Brotman, Starbucks chief digital officer, said that the feature is “really important” at the company’s busiest stores. That’s because it not only adds convenience for customers who can skip the line, but also frees up time for baristas.

“They can put more energy on making food and beverages and connecting with customers,” Brotman said. “This is a big capacity and throughput unlock. As a result, we are seeing Mobile Order & Pay meet or beat all expectations in a way that is very pleasing to us.”

Starbucks also said today that its reward program membership increased 16 percent year-over-year and 8 percent from the most recent quarter. There are 12 million active members in the U.S.; Johnson noted that the company added 280,000 new members just last week. He also said total spend from members grew 22 percent from last year.

“Loyalty remains the cornerstone of our digital flywheel,” Johnson said.

Starbucks recently updated its app — which now lets you earn “stars” for mobile order-ahead purchases — and revamped its rewards program that gives customers “stars” based on money they spend rather than how often they buy items. Johnson said the new app, which rolled out earlier this month, continues to be “very well-received,” with 86 percent of iPhone users and 79 percent of Android users upgrading. He said that there are 19 million mobile app users in the U.S.

starbucksrewards11

Johnson added that than 24 percent of total U.S. transactions were paid using Starbucks’ mobile app last quarter, which is up 3 percent from the previous quarter. He also said that the company continues to improve real-time personalized and relevant offers to app users as it learns more about individual tastes and preferences while improving the back-end technology.

“Today, we communicate in a targeted way via email,” said Matt Ryan, Starbucks global chief strategy officer. “As we progress through the year, you’ll begin to see targeted communication merge with our digital platform and specifically with our app recommendations. We don’t catch people in the moment right now; we will be catching people in the moment as time goes on.”

Starbucks signThere has been some pushback to the app changes, but one week after rolling out the new software and rewards program, executives said today that “we are not seeing any of the noise that has been speculated on coming to bear.” They admitted there could be “noise” during the next few months, but long-term they are not concerned.

Starbucks also is still testing its coffee delivery service. Brotman said it’s “still very early” and didn’t have updates.

“We are continuing to learn how this integrates with our technology, with customer behavior, and what is working well,” he said.

Starbucks, which is also debuting a pre-paid Visa rewards card with JP Morgan Chase later this year, reported a quarterly record $5 billion in revenue last quarter, which was up 9 percent from last year but just missed analyst expectations. The company met estimates for profit with an earnings per share of 39 cents, up 18 percent from last year. Its stock is down nearly 5 percent in after-hours trading, but is up more than 25 percent in the past year.

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