Starbucks Plans Delivery Expansion and Loyalty Changes for 2019

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Starbucks Plans Delivery Expansion and Loyalty Changes for 2019

By Jamie Grill-Goodman - 01/28/2019

On the heels of Starbucks’ announcing the expansion of its Starbucks Delivers pilot to six more cities across the U.S., the coffee retailer’s latest earnings report beat out estimates.

The company earned $0.75 per share in its first quarter of 2019, which beat the Street's estimate for $0.65/share, Forbes reported, noting that last year Starbucks' holiday sales disappointed investors. Starbuck’s posted record revenue of $6.6 billion in Q1 representing 9% growth versus the prior year. Global comparable store sales increased 4%, driven by a 3% increase in average ticket.

“Our holiday plan was informed by insights we gathered from customers who highlighted what they appreciate from Starbucks during the holidays,” said president and CEO Kevin Johnson. “We leveraged those insights to reignite the customer connection in many ways; with improved brand and product awareness, sharper and cleaner holiday merchandising, relevant new offering such as our limited edition red cup promotion, and an enhanced in-store experience.”

Shares of Starbucks rose more than 3% Friday in premarket trading, CNBC reported.

Starbucks Delivers

The Starbucks Delivers pilot expansion, in partnership with Uber Eats, begins in San Francisco, CA, with the company set to bring the service to nearly one-quarter of U.S. company-operated stores by April. The expansion will extend to select stores in Boston, Chicago, Los Angeles, New York and Washington, D.C., in the coming weeks. In total, Starbucks Delivers will be available in seven U.S. cities this spring, including Miami, where the test began in fall of 2018.

According to the company, the Miami test saw strong demand, including repeat business throughout the day and positive feedback from customers. A new pilot will also begin this month in London to trial Starbucks Delivers, powered by Uber Eats.

“Our early experience is encouraging and has provided us the blueprint for how to operationalize this new channel,” said Johnson.

“From a customer perspective, Starbucks Delivers is being seamlessly integrated into the UberEats mobile app enabling full beverage customization and fully integrating into our store operations to ensure a premium Starbucks experience.”

Starbucks Rewards

Since widening the aperture of its digital reach last spring, Starbucks said it has acquired 13 million digital customer registrations.

“We're excited about the potential this has to drive our Starbucks Rewards program,” noted Hotnson.

In Q1 Starbucks expanded its active Starbucks Rewards member base by 1 million customers, a 14% increase that takes active reward membership to 16.3 million.

“This result was driven by leveraging our increased digital reach, as well as a more seamless customer onboarding experience, greater mobile order and pay adoption, and enhanced personalization features,” he said.

Between digitally registered and active reward customers, Starbucks is approaching 30 million total digital connections in the U.S.

Coming up for Starbucks Rewards members, the retailer said enhancements this spring will enable loyalty customers to earn and redeem rewards more quickly and across a broader range of items in stores.

The launch includes a robust marketing activation plan to drive awareness of the changes and overall awareness of the program and key customer benefits. In the company’s second quarter it will begin marketing to the non-Starbucks Rewards 13 million digitally registered consumers.