Starbucks

Mobile Is Now Almost a Third of Starbucks

August 1, 2017         By: Steven Anderson

Even anecdotally, it was clear that mobile is now a huge part of Starbucks’ operations. The fact that individual locations were so glutted with mobile transactions that it was impacting the ability to pick up physical orders was proof enough. Starbucks’ quarterly earnings report, meanwhile, underscores the issue surprisingly well.

Basically, mobile transactions are now almost a third—30 percent—of all transactions run in Starbucks.  The third quarter alone saw the company walk away with a whopping $5.66 billion in revenue, up eight percent from last year. Despite this, it turned out to be a disappointment for analysts who were expecting $5.76 billion. However, non-generally accepted accounting principles (GAAP) earnings per share were right in line at $0.55 per share.

Mobile transactions are only on the rise at Starbucks, too. Last quarter, the total was 29 percent, while the first quarter was 27 percent. One to two percent increase per quarter is nothing to sneeze at, especially when considering the total number of transactions Starbucks sees every day, let alone year.

CEO Kevin Johnson additionally pointed out “Starbucks leveraged food and beverage innovation, an elevated in-store experience and personalized digital connections to our customers to deliver another quarter of record financial and operating performance, despite the softness impacting our principal sectors overall. Continued focus on execution against our strategic priorities enabled us to gain share and positions us well for the future.”

The problem with all this is that Starbucks, so far, hasn’t exactly gone far in addressing the issues that got it where it is right now. With mobile becoming increasingly popular as measured by the last three quarters now, and mobile actually getting in the way, it desperately needs some kind of countermeasure to address these issues. It’s made some progress here, with some dedicated stations for mobile ahead, but is this going far enough? There’s been word about mobile-only Starbucks locations, which may do well in regions with heavy foot traffic, but is this just trading one problem for another in the lack of physical order space?

Mobile is a big part of Starbucks now, for better or worse, and Starbucks needs to manage its growth effectively to maintain its primacy in coffee chains. Only time will tell if it can pull off this balancing act.