Starbucks (NASDAQ: SBUX) has a fairly generous rewards program for customers who use its gift cards or mobile app.
The program provides all sorts of perks, including free refills on basic coffee and tea drinks and a free beverage for every 12 stars they earn (a star equals roughly one purchase). Starbucks will even give any person who joins its rewards program a free drink on their birthday.
It's a very popular program that rewards both regular and casual customers, and of course, at least one industrious person has found a way to take advantage of it.
How does one man get a free drink every day?
Posting at the Kitchenette section of Jezebel.com, an area of the popular website where food-industry workers share horror stories and customer complaints, Starbucks barista Brad Halsey shared his story of a customer who found a way to beat the system. The tactic Halsey details is almost certainly a clever form of theft:
There is a man who comes to my Starbucks every single day and orders the most horrible drink in an infuriating way. He purchased 365 Starbucks cards and registered every one of them online with a different birthday so that he gets a "free birthday drink" EVERY DAY OF THE YEAR. Even though I know exactly how he "beat the system" there, he pretends that his app is just malfunctioning and it magically gives him the same free birthday drink every day.
Purchasing a gift card costs at least $5, so the customer did have to make a fairly significant investment, but his workaround, while probably illegal, would have gone unnoticed if he'd simply switched up which store or time of day he cashed in.
Halsey says he didn't go public with the customer's scam because he beat the system, but because the man was difficult to deal with.
"If he was a nice guy, I might not be so irritated. But he's not a nice guy," Halsey wrote.
Starbucks has a great rewards plan
One of the reasons this customer has been able to scam Starbucks is that the company offers such generous rewards. That's great for its patrons, but it also helps the coffee retailer.
In recent months Starbucks has even expanded its rewards program beyond its stores into its retail partners offering stars when people buy products in grocery stores or other locations. The rewards system is pretty simple. For each purchase a customer makes he or she receives a star. There are some cases where multiple stars are awarded (usually as part of a special promotion) and 12 stars earned equals one free drink of any size.
In recent months the company has expanded ways people can earn stars, tying the rewards program into the Spotify music service and the Lyft taxi-like app. This has made earning stars even more valuable and gives customers even more reasons to try to earn them. It's hard to determine exactly what that means to the company's bottom line, but it's fair to say it's a revenue driver.
Starbucks can create customer action by dangling stars in front of them. For example, the chain sometimes offers bonus star for visiting in the afternoon (when traffic is generally slower) and at other times it offers big bonuses for visiting X amount of days during a certain time period. The promise of stars and the lure of free drinks keeps people coming back.
It also does not hurt that the chain allows people to autoreload the "cards" built-in to the app which allow them to pay by holding up a bar code to a reader. That makes buying things using the app feel less like spending money and a bit more like a game.
It's a clever system that keeps people coming into stores and almost certainly adds to the number of visits and amount spent per visit for each customer.
One bad apple
Scams like the one detailed above can force companies to stop trusting people. Starbucks has not responded to the charges here, but it would not be surprising if simply flashing the app to get a free birthday reward goes away.
The company could force people to show their license or otherwise prove their birthday. This is a case where someone found a loophole that he could have quietly exploited for his own advantage. Instead, he insisted on having an impossibly complicated drink order while treating baristas poorly, and that made his scam public.
One free drink won't hurt Starbucks, nor will 365. But the company needs to close this loophole and make sure people can't exploit its generosity.
Daniel Kline has no position in any stocks mentioned. He has been drinking cold brew. The Motley Fool owns and recommends 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.