Based on a successful delivery trial in China via Alibaba and Uber Eats in Miami, Starbucks has announced that they are adding delivery nationwide. Starbucks COO Rosalind Brewer says they are still looking at the total cost of delivery very “carefully” but they are emboldened by the higher average sale with delivery orders.
Starbucks Delivery via Uber Eats Expanding Nationwide
We’ve had a great trial in Miami and we chose Miami because we know what the temperatures are in Miami. We’ve seen great drink consistency. We’ve seen really good leverage on the ticket, so we’re seeing both food and beverages being ordered. We’re seeing a much larger ticket when we see a delivery from Starbucks.
We’re really pleased that we’re doing this partnership with Uber. We’re learning a lot about technology integration and that’s the real result here, just really making sure that the technology comes together and then we deliver the best product for the customer.
The question around is this a profitable opportunity for us is one of the things that we’re evaluating because it does cost more to deliver coffee. But we are seeing an expanded ticket and that average ticket is really what we need to see happen as we approach delivery. We’re encouraged right now but we’re actually monitoring that very carefully.
Learned From the Alibaba Partnership in China
We’re using a lot of the learnings from China in terms of things like packaging. Not only is it an automobile delivery, we’re seeing that it’s bicycle delivery as well. So we’re understanding that very well. We’re also understanding what is the offering? Should it be the full menu and what dreams do best when they have to be delivered?
State of the Starbucks Economy
What we’re seeing right now is that something like a Starbucks cup of coffee which some assume is an affordable luxury, we’re really comfortable right now. I will tell you one thing about our holiday season that we’re in right now. We learned a lot from what we did last year and we’re really encouraged by the reusable red cup that we entered this year.
We’re doing marketing campaigns and every time we see the Starbucks name mentioned in media we get a pop in our performance. So we’re really pleased with what we’re seeing and we’re a little bit less concerned with the turndown that everyone’s talking about.
When you look at what Starbucks is doing particularly in China and in the US is that we’re still opening new stores. In China, there is still a lot of addressable market for us to participate in. You’ll see us be pretty bullish on the work that we’re doing with new stores and we’re adding delivery which is all incremental business. At this time there’s opportunity for us to continue to grow but we’re watching carefully some other things that are happening globally.
Beverage Innovation is Our Biggest Driver of Growth
The biggest driver of growth for us going forward will be our beverage innovation. You saw us earlier this year introduce a new espresso. You’ll see us bring more of our learnings from our roasteries in terms of what can happen with our beverage innovation. You’ll see us talk more about our Cold Platform, things like our Nitro Cold Brew, and then some of our other beverages that are really doing well for us right now.