Starbucks is a US$70 billion company. Its currect stock price is at historical high. Starbucks has reported record revenues of US$16.4 billion (11% growth) in financial year 2014. The company also invested a staggering US$233 million in healthcare benefits and US$210 million in Bean Stock for the same financial year. However, Howard Schultz, chairman and CEO of Starbucks, is not happy yet.
Somehow, Schultz believes Starbucks can reach US$100 billion in market capitalization, as revealed during the company’s 23rd Annual Meeting of Shareholders. And how does the CEO plan to boost the 44-year-old Starbucks toward a US$100 billion company? Delivery Services. Despite having locations on almost every street corner, Starbucks doesn’t provide delivery services, at least not now.
Starbucks is rolling out two different methods to offer delivery. First, it’s partnering with Postmates, a leading on-demand delivery service, to serve coffee lovers. Postmates operates in 22 markets and has completed 1.5 million deliveries so far. The delivery services will start in the second half (June) of 2015, and the first lucky city is none other than it’s hometown – Seattle, of course.
The second method of delivery option is aimed at office workers. A “Green Apron” barista delivery option will let customers in specific office buildings place orders that will be delivered by Starbucks baristas. Also scheduled to start in the second half of 2015, New York has been chosen as the guinea pig for this pilot experiment. To be exact, it’s New York’s Empire State Building – exclusively – that will enjoy this convenience.
However, just like McDonald’s, Domino’s Pizza or Papa John’s delivery services, Starbucks will charge customers a flat fee (hasn’t decided yet on the amount though), although they should provide the services free, considering their pricey food and beverages. The only good news – Starbucks does not have a minimum order size. Obviously, Starbucks has seen how Burger King tested its delivery service in 2012 with great success.
Presently, Postmates which relies on technology and part-time workers with their own bikes and cars to deliver food and merchandise, charges merchants at US$5 minimum. Depending on distance, the delivery fees could get higher. But with Starbucks locations everywhere, there will be very short distances between pickup and drop-off, hence the promise by CEO Schultz for a flat rate delivery charges.
So far, about 1,000 people in Seattle have signed up for Postmates’ delivery army. It seems part-timers would be flooded with more jobs after this. Moving forward, Starbucks will launch mobile ordering in Canada and a pilot test in the United Kingdom before the end of the year. Does the whole idea make sense? Well, for Starbucks, the new service could build loyalty, not to mention capturing valuable customers’ buying habits information.
To use the delivery service, customers need to order their food and beverage items using Starbucks mobile app, which means clients will need to join the company’s rewards program if they have not already done so. The company’s mobile app has 14 million users, where customers at 650 locations can order ahead and pay for coffee on their phones. With about 18% of Starbucks U.S. sales come through its mobile app, you’re about to be pampered and made lazier with this delivery service.
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March 19th, 2015 by financetwitter
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