Starbucks to Begin Offering Delivery Service in United States
On Thursday, Starbucks announced that it would begin offering delivery services at around 2,000 of its roughly 8,000 stores in the United States in early 2019. The coffee chain began testing its new program in Miami over the summer and will partner with Uber Eats to deliver drinks to customers’ doors.
Customers are increasingly starting to prioritize convenience: in fiscal 2016, 61% of Starbucks’ US sales were made in person, while drive-thru accounted for 34% and mobile orders made up 5%. In fiscal 2018, however, only 51% of sales were ordered in cafes, with increases in the drive-thru and mobile orders to 37% and 12% respectively. As nontraditional ordering - delivery, drive-thru, and mobile ordering - continues to grow, Starbucks must adapt to keep up with the trends. The company reported that over 80% of its new locations that opened in fiscal 2018 were drive-thrus, and drive-thru sales grew faster than general sales by more than 4%. Starbucks has already begun delivering coffee in China, its main growth market. Deliveries started in August in Beijing and Shanghai, where Starbucks partners with Alibaba’s Ele.me delivery service and plans on expanding from 150 stores to 2,000 stores across 30 cities. Piloting this service in the United States could help Starbucks boost its profit, which has fallen slightly in the most recent quarter.
Although the food delivery market is rapidly growing, Starbucks could face some challenges in delivering its products, due to the nature of coffee and tea. Consumers expect their drinks to be hot, and unavoidable delivery time could cause the beverages to cool down to unwanted temperatures. Furthermore, delivery services require surcharges, and having customers pay an extra cost for a potentially less-than-ideal coffee could be detrimental to the Starbucks brand.
Starbucks seems to have considered potential obstacles; CEO Kevin Johnson says that coffee made for delivery are prepared hotter than average. In China, the company’s drinks are delivered at temperatures that are “very close” to those of drinks made in store. Starbucks’ widespread presence could also allow the chain to have faster delivery times, giving it an edge in a rapidly growing market.