Starbucks Will Soon Make Getting Your Caffeine Fix a Whole Lot Easier

Innovation from Starbucks extends beyond its product offerings.

Jun 22, 2014 at 5:30PM

Source:  Starbucks

The long lines at your local Starbucks (NASDAQ:SBUX) may be about to get really short. No, I'm not talking about increased competition, falling demand, or accelerated order processing. I'm not referring to more registers, simpler menus, or even faster pay options at checkout. What I'm referring to is the coolest thing in Starbucks technology that will make waiting itself a thing of the past.

Immobile mobile
Isn't it a bit ironic that our mobile devices are allowing us to be more immobile? Our devices allow us to do more while doing less. On that note, and you may not be aware, but Starbucks' app happens to be the No. 1 payment app of anybody out there.

Scott Maw, CFO of Starbucks, stated at a recent conference about its digital initiatives:

I think the first thing we can say with confidence is we have a position in this space that is unequaled by others, particularly in mobile payments.

Maw said that the management teams knows with confidence that it is No. 1 though it is unaware of even who No. 2 is, suggesting whoever it happens to be is nowhere even close. Starbucks has a significant portion of the mobile-pay market share.

Three is a charm
For Starbucks, its domination secret is working in a threefold manner of things working together: digital, mobile, and rewards. The "My Starbucks Rewards" now has more than 8 million members and is "growing rapidly." The result is more frequent visits from these people. Starbucks is able to market directly to them, digitally, and help get them into the stores.

Fourteen percent of payments at Starbucks are now from using the mobile app. People are quickly becoming as addicted to using the app as they are to caffeine. The comfort of using digital applications in the companies' locations is increasing to the point where one-third of customers will use some form of a digital means to pay their tab, such as the reloaded gift cards.

Source:  Starbucks

The really cool line-killer
It may be a tad premature for me to get excited since it's technically not even in pilot mode yet, but Starbucks will be testing an option on the app to order in advance. Then you can walk right in the store and pick it up.

Line wait becomes irrelevant. If I can do a couple of clicks, walk in, and my order is literally waiting for me, I'm so in. I imagine millions of Starbucks fans are on the same page. How many times have you and millions of others been running late to work and didn't have time to take a chance waiting on line? Step aside, drive-thru. Starbucks has an even quicker idea.

Assuming the pilot tests work well, and it's hard to imagine, at least to me, that they won't, Starbucks expects a national rollout during the back half of next year, perhaps just in time for the holiday shopping season. How cool is that to save sometimes 10 to 15 precious shopping minutes when you're able to make a rolling pit stop at Starbucks?


Source: Starbucks

Foolish takeaway
This could be a game-changer for Starbucks. Not only is there the direct obvious benefit of likely higher sales from those using the app, but the reduction in the line should please the traditional crowd that is ordering and paying the old-fashioned way. As an additional bonus, digital-app ordering should reduce labor costs and mistakes even if just slightly. As with any business, especially in the food business, all things being equal each penny you can trim in costs is an extra penny to the bottom line.  

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Nickey Friedman has no position in any stocks mentioned. The Motley Fool recommends Starbucks. The Motley Fool owns shares of Starbucks. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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