Starbucks (NASDAQ:SBUX) has morphed from being a coffee company into being one driven by technology. That should allow the brand to move beyond its traditional delivery methods and find new ways to put coffee into the hands of customers.
Not only are the days of standing in line, calling out your order, and waiting for your coffee ending, in some cases Starbucks is going to bring your drink to you. That might be necessary, because the chain has been almost too successful driving customers to its stores.
"For the quarter we drove nearly 9 million more transaction[s] through our U.S. stores than we did last year and over 12 million more globally," said CEO Howard Schultz during a conference call to discuss first quarter results.
To serve that many customers -- specifically in the U.S., where Schultz said one in every seven adults received a Starbucks gift card this holiday season -- the company needs to continue to innovate. Schultz laid out how that will happen during the call.
Mobile order and pay is coming
Over 13 million people in the U.S. alone are using mobile payment via the Starbucks app, according to Schultz. Paying via Apple (NASDAQ:AAPL) iPhones or Android phones speeds lines slightly, as it's a simple scan rather than the awkwardness of cash or the time necessary to run a credit card.
The company processes 7 million mobile transactions, or "roughly 16% of total tender," in its U.S. stores each week, Schultz said.
Mobile payment speeds lines a bit, but the next step in the evolution of the app will eliminate the line altogether. The company rolled out mobile order and pay in December in 150 stores in the Portland, Oregon area. This technology allows customers to order and pay for their drink/food before they enter the store. This eliminates wait time, shortens the line for other customers, and allows a store to increase volume without making people stand around waiting.
Schultz said the technology has been extremely well received and that the company plans to expand its use to 600 stores in the Pacific Northwest over the next few months.
"It will be rolled out nationally later in calendar 2015," he said.
Schutlz said that the initial trial shows that mobile order and pay not only improves the Starbucks experience for customers, it also increases use of the app and drives membership in the loyalty program.
Delivery is coming
While ordering and paying via app so your drink is waiting for you is convenient, not having to leave your home or office at all is even better. Schultz said he expected the company to begin delivery in late 2015 and shared that it was planning two distinct delivery models.
One uses the company's "own people, green-apron baristas," he said. "and the other of which leverages the capabilities of a third-party service."
Schultz did not offer a lot of details about how the company will make this happen, but he seemed quite confident that it would.
"Rest assured that delivery, like mobile order and pay, will drive incrementality and increase customer loyalty," he said.
New kinds of stores
In addition to using technology to put coffee into customers' hands more expediently, Starbucks is also testing new store models which meld old-world and technology solutions. In New York, the chain is testing what Schultz describes as "smaller, alternative footprints."
These, he said, "respond the to the continued urbanization of retail."
This pilot project will involve opening express locations in New York which offer a streamlined assortment of food and beverages. These stores will also integrate mobile payment and mobile ordering in "order to enhance customer experience and provide even more convenience in these locations."
It's all about making it easier
One thing Schultz made very clear is that technology is a means to an end not a goal in and of itself. The company wants mobile ordering and payment because it shortens lines and improves the customer experience. The same is true of delivery and creating streamlined express locations.
It's all about putting coffee (and maybe a pastry) into your hands quickly with as little effort as possible.