Starbucks designed menus for delivery in China in hopes of staying under 20 minutes on orders. “I know a macchiato or a cappuccino, something that has foam, it doesn’t hold up well after 20 minutes,” Grismer said. “And so there were certain products that were removed from the delivery menu, so that we could, with confidence, enter into delivery knowing that our consumers would be having a comparable high-quality product and service experience whether in that fourth place or the third place.”
What’s worth pulling from this is whether or not these learnings will translate to the U.S. experience. It’s hard to imagine that not being the case to some extent.
The thought of streamlined delivery rewards integration is a massive one as well. Starbucks grew its active member base by 500,000 customers in Q2, a 13 percent increase that brought its numbers to 16.8 million. Starbucks Rewards members accounted for 41 percent of sales in the U.S. The chain also touted 15.3 million digitally registered guests who are engaged with the brand but haven’t converted into the rewards program.
Grismer said Starbucks, from a tactical perspective, has worked on reducing points of friction in digital engagement over the past year. It’s reduced the number of steps to place an order from seven to three.
The company also worked on machine learning so that, as consumers are engaging with Starbucks on mobile, they can see relevant recommendations. They can access the history of their orders, which facilitates placing future ones.
The Nestlé deal
Starbucks shook up the CPG space last May when it announced a $7.15 billion move that would bring its packaged coffee into markets around the globe. Nestlé obtained the rights to market, sell, and distribute Starbucks, Seattle’s Best Coffee, Starbucks Reserve, Teavana, Starbucks VIA, and Torrefazione Italia packaged coffee and tea in all global at-home and away-from-home channels. And it paid Starbucks $7.15 billion in closing consideration for it.
Grismer said at the conference that the partnership affords Starbucks the opportunity to spread its coffee web. “Yes, our heritage and our strength is in specialty retail, and that’s where we have focused most of our resources. That is but one element of the total coffee category,” he said. “So we are mindful of the away-from-home experience, single serve, whole bean roast ground and instant, including foodservice.”
The Nestlé deal focuses on that last run of options, allowing Starbucks to penetrate categories within coffee on the shoulders of its massive brand equity. He said it would accelerate Starbucks’ infiltration to more than 100 countries, with preference given to those areas where it already has an established presence with specialty retail.
With that awareness, Starbucks “can capitalize on that as we come behind that with strong offerings and collaboration with Nestlé to ensure that we are building share in categories like CPG and foodservice,” Grismer said.
The importance of Reserve
Even as the digital push deepens, Starbucks’ blockbuster Reserve Roastery experiences will remain a key element, Grismer said. Check out this jaw-dropping location in New York City.
Grismer admitted, “the economics are more challenging with those stores.”
“We believe that it is something that is very unique to Starbucks, something that only Starbucks can do in the coffee category, something consistent with our statures of brand within coffee globally and something it allows us to therefore amplify the brand,” he said.
Grismer added it not only serves the local customer, but serves as a banner of sorts for Starbucks to introduce customers to its innovation. And it allows the chain to evolve what it brings to core stores. “So the Roasteries serve that purpose elevating and amplifying the brand, while at the same time being a catalyst for innovation in terms of how we drive continued news into our core stores,” he said.