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Starbucks Is Ramping Up Drive-Thru and Digital

By Jennifer Saibil – Jun 10, 2020 at 12:52PM

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The coffee chain is expanding options and formats to meet new customer needs.

Starbucks (SBUX -2.67%) is powering ahead with digital expansion as it pivots to meet new customer behaviors. The coffee king announced a new direction for its operations today. It also released guidance for the upcoming quarters.

Fast-tracking digital expansion

The company announced that over the next 18 months it will strengthen digital options in several key areas that it terms "convenience-led formats." Even before the pandemic, to-go options accounted for 80% of orders, and current consumer retail trends are reenforcing these habits.

Starbucks has 19.4 million rewards members, and furthering the digital transformation is meant to fully engage these members.

Starbucks mobile order and pickup location.

Image source: Starbucks.

Pickup stores

Starbucks piloted an order-ahead, pickup-only store at Penn Plaza in New York City and will roll out several more of these stores in dense, urban areas such as Chicago, Seattle, and San Francisco. These are geared toward customers on the go, and the Penn Plaza store, as well as a second store at Grand Central Terminal, has received positive feedback.

Curbside pickup

Customers can order and pay ahead at many stores and get their orders from designated parking spots. As another quick option where customers can engage with digital, it also serves to enhance safety during the COVID-19 pandemic. Starbucks will increase the number of stores that offer this service and also pilot a curbside-only store.

Drive-thru

Starbucks is increasing the amount of drive-thru locations outside of urban areas and experimenting with the concept, such as offering a two-lane drive-thru and mixing drive-thru and curbside-pickup-only stores.

All of these options are meant to offer users the best customer experience as they lean into digital, allowing Starbucks to enhance its customer-centric approach even with limited dine-in capabilities.

Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Starbucks. The Motley Fool has a disclosure policy.

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