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Starbucks to expand delivery to 2,000 U.S. stores

Starbucks to expand delivery to 2,000 U.S. stores

Coffee chain will add the service early next year in partnership with Uber Eats

After testing delivery in 100 stores in Miami this fall, Starbucks will expand the service to 2,000 U.S. stores — or about a quarter of its domestic company-operated system — early next year in a partnership with Uber Eats, the company said Thursday.

Starbucks COO Rosalind Brewer, speaking at the company’s biennial investor day in New York, said the test had received “high remarks” and the target rollout date for the new delivery platform was late March or early April.

Technology-driven initiatives have been a key focus for Starbucks in recent months as it looks to strengthen digital relationships with customers and leverage the convenience of digital transactions to drive traffic.

In 2018, 51 percent of orders were taken by an in-store barista, down from 61 percent in 2016 as a result of the company’s mobile push, and drive-thru and delivery platforms, Starbucks said. Mobile order and payment nearly tripled from 5 percent of total sales to 12 percent over the past two years.

“Offering delivery through Uber Eats shows that Starbucks knows their customer well,” Bob Phibbs, CEO of New York-based consultancy the Retail Doctor said. “They know that customers value convenience over anything else, including price […] It should be a lesson to their lower-priced competitors, such as McDonald’s and Dunkin’, that convenience is always going to win more customers than price.”

Starbucks CEO Kevin Johnson said that delivery expansion in the U.S. is being informed by learnings from their current delivery partnership with Alibaba in China.

The company declined to comment further on its Uber Eats partnership and delivery capabilities. It said in September that the Miami delivery test included unspecified “select items” including its popular caramel Frappuccino.

Meanwhile, Starbucks is continuing its growth push in China with the launch of its first-ever virtual store there. This digital collaboration will provide customers with a “one-stop shop” Starbucks experience where customers can gift digital gift cards to friends and family, purchase Starbucks merchandise, and place a Starbucks delivery order all in one place. 

For the fourth quarter, ended Sept. 30, Starbucks’ same-store sales were up 3 percent and same-store sales for the Americas and U.S. region were up 4 percent, which Johnson noted was “our strongest comps in the past five quarters.” 

Net revenues for the period increased 11 percent to $6.3 billion, from $5.7 billion in the same quarter a year earlier. Net income decreased 4.1 percent to $755.8 million, or 56 cents per share, compared with $788.5 million, or 54 cents per share, in the year-earlier quarter. 

Starbucks has more than 29,000 stores worldwide.

Contact Joanna Fantozzi at [email protected] 

Follow her on Twitter: @JoannaFantozzi

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