Starbucks Details Expansion Plans Focused On Mobile Orders
The pandemic has shifted some business models — permanently. Even those retailers that rely on brick-and-mortar operations are seeing a change in how consumers order and want to pick up what they ordered — especially coffee.
To that end, according to reports, Starbucks said at its biennial investor day Wednesday (Dec. 9) that it would look toward growth into the next year and beyond, bringing its total store count (both owned and operated) from a current 33,000 to 55,000 by 2023.
Along the way, the company said in materials published on its site, Starbucks has seen its store base shifting toward convenience. The roster in the future will be divided 55 percent cafe, 40 percent drive-thru and 5 percent PickUP/New Formats.
In additional expansion goals, the company said that in China, as reported by QSR Magazine, it will open 600 new sites in 2021, with 10 percent of that tally coming in the form of Starbucks NOW operations (which are express retail locations that combine cafe with Mobile Order and Pay). By the end of 2022, the China store count will be more than 6,000.
As reported in this space in October, Starbucks Corp. said in its fourth quarter earnings report that comparable-store sales dropped 3 percent, with comparable transactions lower by 7 percent, partially offset by a 5 percent rise in average ticket. But as detailed on the analyst call, Starbucks President and CEO Kevin Johnson said China’s mobile order sales mix more than doubled in the last 12 months to 26 percent in Q4, with 13 percent originating from delivery and 13 percent from mobile order and pay.
“The digital innovations we launched in China throughout fiscal 2020, including a new WeChat mini program and the enhanced Starbucks Rewards program, along with our digital partnership with Alibaba, have fueled customer engagement and strong sequential growth in active Starbucks Rewards members,” Johnson said on the call. Starbucks Rewards 90-day active members in China in Q4 climbed 36 percent over Q3 to 13.5 million, representing 34 percent growth over the past year.
Johnson noted that about 75 percent of U.S. sales volume in Q4 was drive-thru and mobile orders.
“Although this was meaningfully down from 90 percent in Q3, reflecting a sizeable shift to on-premise occasions in Q4 as we progressively restored seating in our cafes, this is notably higher than pre-COVID levels at approximately 60 percent of sales,” Johnson said.
Furthermore, Johnson noted that the coffee chain’s mobile order transactions continue to grow, rising from 18 percent in Q2 to 24 percent in Q4.
QSR reports that 45 percent of stores will offer pickup moving forward from a current level of 35 percent. The company said its digital sales mix stood at 26 percent at the end of the fourth quarter of fiscal year 2020, which ended in September — up two times over the previous year’s level.
In the latest PYMNTS ranking of mobile order-ahead apps, Starbucks came in at number 3.