Earlier this year, Starbucks (NASDAQ:SBUX) rolled out a new mobile application. Intended to be leaps and bounds better than the old one, it was meant to serve as a launch pad into the new world of mobile payments.
Well, it did that to a degree, but in my opinion, it's not what I would call perfect. If you look on Apple's "App Store," you'll notice that the new Starbucks app has a dismal 1.5 star rating. This would suggest that many are not very pleased with the new interface.
Which company has got it right?
Before taking a look at Starbucks, I want to highlight a company that has absolutely blown the App store out of the water in regard to the fast-casual dining space: Panera Bread (NASDAQ:PNRA.DL).
You can read about why I love the new Panera app in Have You Tried the New Mobile App for Panera Bread Company? I think the article does a great job at showing you (literally, with a slideshow) what the new app is truly like.
Panera's new mobile app is great because it gives users a clear picture of its entire menu; users can see what each food item looks like, its cost, and its nutritional content. You can add extra ingredients, subtract the ones you don't like, and navigate the interface with extreme ease.
Customers can order ahead of time, reduce the hectic "mosh pit" ordering chaos, as CEO Ron Shaich calls it, and select a specific pickup time as far as five days away. And although you can pay for your order online, the app does lack digital payment abilities for orders placed inside the store.
This is where Starbucks' app has merit
Where Panera's app lacks, Starbucks' app outperforms. Specifically in payments. When you approach a Starbucks cashier, you can quickly pull out your phone and pay for your order. You'll also receive "Starbuck Stars," which are part of the loyalty program.
It's extremely easy to link your credit card to the app and reload your account when necessary. Also, iPhone users can store the app in Passbook, which is an easy-to-use application from Apple that saves coupons, plane tickets, and payment methods -- such as the Starbucks card.
However, the app doesn't just make for quick and easy access for iPhone users. The payment method will pop up on the user's lock screen when the customer enters the store via sensor technology. Have a look at my screenshot below:
Source: Author's screenshot
CEO Howard Schultz has spoken multiple times on the potential of digital payments. In April, he told BusinessWeek:
Everyone in the world is chasing mobile payment. The question is, who's going to become the Visa of digital payment? There's no doubt the phone is going to be your digital wallet.
The good and the bad
While the Starbucks app thrives with mobile payments, store location, and ease of use, it is missing at least one key component: The menu.
The old Starbucks mobile app allowed users to browse the menu, which made it easier to try new drinks. Unless you're a coffee connoisseur or a barista, it's an entirely different world when you're new to all of the different frappes, lattes, teas, and coffee blends.
The old Starbucks app used to have a menu and I think it would be beneficial to bring it back. Here is what the old app used to look like:
Source: Author's screenshot, red areas and boxes added to show my choices. (left) Choose your drink, hot or cold; (middle) choose the drink category; (right) select or check out a specific drink from the category you chose.
An idea worth thinking about
Unlike Panera Bread, which has a throughput issue (which means it cannot handle its order flow in a timely manner) during peak hours, I don't think Starbucks necessarily needs ahead-of-time ordering.
To some degree though, it couldn't hurt to be able to place an advanced order for, up to say, 20 minutes into the future for pick-up. This may help improve restaurant efficiency, and thus margins, but it's far from necessary at this point in time.
It would be nice for the "regulars" if they could schedule their daily cups of coffee, tea, or other routine drinks for easy pick-up. Say they drank medium...err, grande...cups of Blonde Roast coffee on Monday through Friday on the way to work. If they usually arrive at Starbucks around 8:45 a.m., their drinks could be ready for them if their orders were placed ahead of time.
The company is exploring and testing this concept of "express ordering", as mentioned in its recent investor presentation at the William Blair & Company Growth Stock Conference.
Starbucks also revealed how much room it has to grow mobile payments, even though it processes 5 million digital transactions per week. According to its presentation, over one-third of payments take place through Starbucks cards, and 14% are done via mobile devices.
As more customers adopt the use of the mobile app and apply their Starbucks cards to the application, the coffee brewer will continue to amass more and more digital payments.
The Foolish takeaway
Digital payments are quickly becoming a bigger and bigger aspect of our lives. Sensor use is also emerging in our lives in a much more meaningful way than perhaps many of us had previously been aware.
Schultz is such a fantastic leader and such a compelling speaker that I'll let his words end this piece. In late April, he said:
There's no consumer brand on the planet today that can endure and succeed unless it is being integrated seamlessly with mobile and social strategy. We are leading in mobile today, but that lead is not something we're entitled to. We have to constantly reinvent. We're going to build a business that we think will be quite significant in the future.
Bret Kenwell owns shares of Panera Bread, Starbucks, and Visa. The Motley Fool recommends Apple, Panera Bread, Starbucks, and Visa. The Motley Fool owns shares of Apple, Panera Bread, Starbucks, and Visa. 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.