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Starbucks Plans to Test Mobile Ordering This Year

March 12, 2014

Starbucks Plans Mobile-Order Test This Year in Digital Push

A Starbucks Corp. store in New Delhi, India. Photographer: Brent Lewin/Bloomberg

Starbucks Corp. (SBUX:US), the world’s largest coffee-shop operator, will test a smartphone service this year that lets customers order items ahead of time at some U.S. cafes, part of a push to promote its mobile application.

Starbucks is “actively working” on mobile ordering, Adam Brotman, chief digital officer at the Seattle-based company, said in an interview. The move would let customers select coffee or food while in line or before coming into a cafe, potentially speeding up service and saving time.

“It’s something our customers have asked for,” he said. “We’re not revealing a lot of details about it now.”

Starbucks, which processes 5 million mobile transactions a week, has been focused on expanding and improving its rewards program and mobile apps to help boost sales. Last month, Chief Executive Officer Howard Schultz handed over day-to-day operations to Troy Alstead, chief operating officer, so he can focus on “next-generation” retail, digital and mobile payments, the company’s loyalty program and electronic commerce.

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Schultz is “working directly on all of the mobile plans and vision we are putting together,” Brotman said. “He’s very involved.”

On March 19, the company will update its iPhone app to include barista tipping and a new shake-to-pay function. More than 11 percent of the company’s U.S. store transactions are handled with a mobile device, and that figure may double a year from now, Brotman said.

Dunkin’ Donuts

Shares of Starbucks, which has more than 20,000 locations worldwide, rose (SBUX:US) 0.8 percent to $75.63 at the close in New York. The stock has slipped 3.5 percent this year, while the Standard & Poor’s 500 Index has increased 1.1 percent.

Other chains are trying to compete with Starbucks by introducing their own mobile platforms and loyalty programs. Dunkin’ Brands Group Inc. (DNKN:US)’s Dunkin’ Donuts rolled out a national rewards program in January. McDonald’s Corp., meanwhile, plans to test mobile-phone ordering and payment around the world this year, Chief Financial Officer Peter Bensen said at an investor conference today.

The opportunity is big. About 58 percent of American adults have a smartphone as of January, according to research from the Pew Research Center in Washington.

In 2008, the year that Schultz returned as CEO, Starbucks joined Twitter and unveiled its Facebook (FB:US) page. The next year, the company introduced its loyalty card and Starbucks card mobile-payment programs. It has since added free Wi-Fi to its stores.

To contact the reporters on this story: Leslie Patton in Chicago at lpatton5@bloomberg.net; Brian Womack in San Francisco at bwomack1@bloomberg.net

To contact the editors responsible for this story: Nick Turner at nturner7@bloomberg.net Kevin Orland, James Callan


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Companies Mentioned

  • SBUX
    (Starbucks Corp)
    • $80.21 USD
    • -0.31
    • -0.39%
  • DNKN
    (Dunkin' Brands Group Inc)
    • $47.54 USD
    • -0.46
    • -0.97%
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