Starbucks Pickup locations are designed for large metros. The brand pictures a mix of traditional cafes and Pickup locations in each market. The first version of the latter, tailored for consumers who order ahead and pay through Starbucks’ mobile app for pick-up, or those who want to order delivery, debuted November 2019 in New York City’s Penn Plaza. The second is planned for 42nd and Park near Grand Central Terminal in the near future.
Starbucks sees these within walking distance of typical units, looking toward NYC, Chicago, Seattle, and San Francisco out of the gate. An end goal: more points of presence to serve on-the-go customers while reducing crowding in cafes and actually improving the “third-place” occasion Starbucks built a coffee empire on. It aligns with several notions—higher levels of mobile ordering, more contactless pick-up options, and, importantly, reduced in-store congestion.
Starbucks previously said these will number in the “hundreds” within five years.
The congestion point might be an understated one. Johnson said Starbucks predicts “huge, huge demand” for the third-place experience once there’s a vaccine and therapeutics that allow people to feel more comfortable socializing and being a part of the community.
“That's seating in those stores and people coming to enjoy their beverage in their food with others and socialize in our stores and be a part of the community,” he said. “But this is down the road … there is going to be a huge, huge wave of demand for that and so not only are we laying the foundation with the digital relationships and taking care of our customers with safe, familiar and convenient, but we are also investing and ensuring that when that demand unfolds that third-place experience will be at the pinnacle of serving those customers who want to come and be a part of the community and socialize again because that's something that we all aspire for.”
What prompted this response from Johnson was a question about Starbucks “Stars for Everyone” rewards update in September.
The rollout made it easier for customers to earn “Stars,” but, perhaps more notably, allowed users to scan their app and pay with cash, credit/debit cards, or select mobile wallets and earn rewards toward free items. Members can save the payment methods directly in the Starbucks app to earn Stars.
This was long one of the biggest friction points and complaints among the chain’s core loyalty base. Previously, customers had to load funds onto their account.
“That expanded customer reach digitally is going to be a huge asset even, I'll say post-COVID or post-vaccine, but the fact that we're focusing on customer experience, beverage innovation in addition to digital, is important for the following reason: People are craving the opportunity to socialize right now, and they can't,” Johnson said.
Starbucks Rewards drove 47 percent of U.S. company-operated tender in Q4 for the second consecutive period, up from 43 percent in Q1 before COVID arrived. Importantly, Rewards contribution improved and returned to pre-virus levels driven by recover in member spend and higher mobile order and pay usage. Additionally, Starbucks’ 90-day active rewards member base increased b 3 million members in Q4 to approach past levels of 19.3 million, a year-over-year lift of 10 percent. It had fallen as low as 16.4 million when people locked down.
Another interesting note is that Starbucks’ Cream Cold Brew actually outsold the Pumpkin Spice Latte this season, which led the entire pumpkin platform to a record high in average daily units. It reinforces Starbucks’ transaction shift to mid-morning and afternoon occasions.
Part of the check growth was also due to premium priced plant-based items and larger group orders.