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04/28/2021

Starbucks Adds 1 Million+ Loyalty Members As It Grows AI Engine

Lisa Johnston
Senior Editor
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More than half of Starbucks’ U.S. company-operated sales in its fiscal second quarter were driven by its Rewards members, as the company grew 90-day active members by more than a million.  

This brings the total number of Starbucks Rewards loyalty members to nearly 23 million.

Orders via its mobile app, meanwhile, represented 26% of transactions in the second quarter, an increase of 18% vs. last year. The company has taken steps to lower the barrier to entry for the program, resulting in a significant number of more occasional or lower-frequency customers joining.

“We still see that high frequency overall for the program,” said Brady Brewer, Starbucks EVP and chief marketing officer, “but what's great about seeing those occasional customers join is that we also see that significant lift in frequency and spend from those members just as we do from the high frequency members that join.”

Global revenue grew 11% in the quarter, to $6.7 billion, thanks to growth from company-owned retail market sales in the United States. U.S. comp-store sales rose 9% for the period.

Though he didn’t provide a timeline, Starbucks president and CEO Kevin Johnson said Starbucks intends to double its number of loyalty members. As a result, it’s applying new ways to leverage consumer data so it can also personalize offers and experiences for non-rewards members, tapping into partnerships that include Amperity.

Starbucks also shared more details on its artificial intelligence engine known as Deep Brew, which personalizes offers and suggestions to consumers. The technology now features automated daily inventory orders across hundreds of U.S. stores in order to support partner scheduling.

“Deep Brew drives our pandemic dashboard used by our retail leaders across the U.S.,” said Johnson, noting that it’s using predictive analytics to model vaccination progress in key global markets.

“Our work in AI is providing Starbucks the underlying predictive models, enabling us to fuel the great human reconnection by freeing up partners to do what they do best, connect with customers and deliver a world-class customer experience,” he added.  

Starbucks also continues to invest in initiatives increasing drive-thru throughput, including handheld order devices for associates. Drive-thru sales drove more than 50% of net sales for the period, which is up 10% from pre-pandemic levels.

Starbucks is about 70% of its way through its plan to reposition 800 stores in North America this year.

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