Mobile Order-Ahead Now One in Ten Starbucks Transactions

Amazing news recently hit from a Starbucks earnings call that broke down into two key points:

1. Mobile order-ahead now accounts for one in 10, roughly, transactions in the United States.
2. Starbucks missed its revenue expectations anyway.

Despite the huge gains in mobile order-ahead operations, the company put up $5.7 billion in revenue, which was about the same as it had put up last year. Moreover, it was down from the $5.8 billion analysts were expecting, which ended up sending Starbucks share prices on a tumble, down six percent on Thursday alone.

However, its non-generally accepted accounting principles (GAAP) earnings per share were $0.55, which not only matched analyst expectations, but actually represented a 10 percent increase over the same quarter the previous year.

The success of mobile order-ahead, Mobile Order and Pay as Starbucks calls it, was already known anecdotally for the sheer amount of headache it caused at the counter, leading Starbucks to actively consider devoting entire shops to it. The problem may get worse; CEO Kevin Johnson noted that Mobile Order and Pay would soon be available to every Starbucks customer. Right now, it’s only available to those enrolled in Starbucks Rewards, and there’s a problem there too.

Starbucks Rewards membership grew 11 percent over the last year, with 13.3 million active members accounting for just over one in three dollars the company makes, at last report. What’s more, customer satisfaction is up among Mobile Order and Pay users, hitting “record highs” in the last quarter.

That could be bad news; the company’s already seen how mobile order-ahead options can clutter up a normal workflow, forcing baristas to choose between failing someone at the counter or someone who’s ordered ahead. Starbucks, to its credit, is making adjustments accordingly—it’s added not only dedicated stations for order pickup but also supplied its baristas with tablets—but it’s likely going to have to do better going forward to keep from losing business altogether.

Essentially, right now, Starbucks’ biggest problem is its own success. It’s basically doing too well, using mobile order-ahead options to compound the problem of in-store queues. It’s going to take deeply engaged management to really succeed here, though, as the chain may have to pivot quickly to win.