Starbucks To Offer Delivery Service Via New App

By next year's second half, Starbucks loyalty program members in at least some U.S. markets will be able to use a new Starbucks app not only to order and pay, but to get their beverages and food delivered to their locations, the QSR announced during its fourth-quarter earnings call yesterday.

Starbucks had previously announced that a new mobile ordering and payment app that it's readying for release will enable users to place their orders ahead of time and skip waiting in the lines endured by walk-ins. Yesterday, it said that that capability will be available to app users in Portland, Ore., in December, and to the rest of the country next year. 

As for the newly revealed delivery option that's to be launched in the latter part of 2015, Starbucks did not say which "select markets" it would be offered in initially. Nor did the company say whether the long-term plan is to roll it out nationally, at least in urban markets, or whether the deliveries are to be available only in companies and offices.

But CEO Howard Schultz did say that giving customers the ability to have "a standing order of Starbucks delivered hot to your desk daily" is one of the next big leaps for Starbucks' ambitious e-commerce plan — a foundation of its strategy to stay ahead of shifting consumer habits by becoming less reliant on physical stores. "We are playing offense," he said, by addressing technology and delivery with "a vengeance."

Jeff Macke, writing for Yahoo Finance, noted that "it's not a fantastic business model" to deliver relatively low-margin products like coffee, but praised Schultz for innovating aggressively to address the serious challenge of declining foot traffic in malls and physical stores as shopping shifts online, as well as reduced consumer spending.  

Schultz said that Starbucks' mobile app will be unique in its ability to integrate mobile ordering in the company's loyalty program and its  physical store operations, and that the resulting convenience will be a powerful customer loyalty enhancer. 

Starbucks' global sales rose 10% in the quarter ended Sept. 28, to a record $4.2 billion; its earnings per share excluding one-time items rose 23% to 74 cents from the year-ago period; and it confirmed its expectations of 16% to 18% revenue growth (including incremental revenue from its planned acquisition of Starbucks Japan) and mid-single-digit same-store sales growth for fiscal 2015. 

Still, the Q4 revenue growth and global same-store sales growth of 5% (marking Starbucks' 19th consecutive quarter of same-store gains of 5% or greater) fell short of analysts' expectations.

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