Usage of Starbucks’ mobile order-ahead feature continued to increase last quarter as the coffee giant missed revenue expectations for its quarterly earnings.
The Seattle company reported $5.24 billion in revenue for the quarter ending June 30, up 7 percent from last year, but below analyst expectations of $5.33 billion. Starbucks is also seeing sales slow in the Americas, its largest region.
Starbucks’ Mobile Order and Pay usage reached 5 percent of all U.S. transactions, up from 4 percent last quarter. On the company’s earnings call, executives talked about how new technology features can help boost sales. They were asked about opportunities with “awareness” in regard to the Mobile Order & Pay, which first launched in Portland more than a year ago and allows customers to skip the line by ordering in advance from their phone.
“There are a lot of customers that don’t know about Mobile Order & Pay and the tremendous benefits,” said Matt Ryan, global chief strategy officer. “We are very fortunate we have that in front of us. … We’re going to continue to lean in hard with Mobile Order & Pay, continuing to improve the experience, and showing people just how good it can be.”
Starbucks sees higher usage of Mobile Order & Pay at its busiest stores, which is important for the company because it not only adds convenience for customers who can skip the line, but also frees up time for baristas.
Starbucks President Kevin Johnson said it’s crucial for the coffee giant to have more customers simply give the order-ahead feature a test run. It went live across the entire U.S. this past September, covering more than 7,400 stores, and is also being tested in Canada and the U.K.
“It’s a very sticky feature,” he noted. “Once they try it once, the vast majority of people start using it regularly.”
The order-ahead feature ties into Starbucks’ app and Rewards loyalty program, which increased membership by 18 percent year-over-year to 12.3 million active members in the U.S.
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. Starbucks CEO Howard Schultz today called it a “once-in-a-decade” change that would be “more fair for all of our customers.”
Ryan said that the program changes, which did see some initial pushback, will help Starbucks add more personalization features to its app — in particular with “suggested selling.”
“We will be suggesting personalized offers within the context of the app that will allow people to see things that are right for them,” he said.
Ryan added that “we’ll be able to suggest items with a currency that rewards frequency and spend.”
“You will see how this builds on itself and gives us leverage to drive total customer sales,” he said.
Starbucks, which launched mobile payment technology in China and Japan this past quarter, also said today that it expects to make “another significant amount of investment” for its digital products in 2017.
Shares of Starbucks were down nearly 3 percent in after-hours trading.
