One bright spot in the U.S. for Starbucks came in the form of digital engagement. The Starbucks Rewards loyalty program now counts 15.1 million active members—a 14 percent increase from a year ago—and 13 percent of all transactions are made via Mobile Order and Pay. The brand has engaged 6 million new digitally registered customers who are not yet Rewards members, suggesting no shortage of white space in digital and loyalty.
“We'll significantly enhance the appeal of the rewards program next spring when, for the first-time, customers will be able to redeem different amounts of stars for different products, giving them a choice to use stars sooner for lower ticket items or save for higher ticket items like lunch, packaged coffee, and merchandise,” said COO and group president Rosalind Brewer.
Starbucks started the quarter in an unwanted spotlight. The previous earnings call came just a week after two black men were arrested at a Philadelphia-area store after the store manager called the police because they had not placed an order. The company swiftly responded to the incident by shutting down all U.S. stores to hold racial-bias training for employees May 29. Starbucks reached a settlement with the two men, and Johnson flew to Philadelphia to meet with them personally.
On the leadership side, CFO Scott Maw announced in June he would be retiring in November after more than four years in his current role and seven with the company. The news dovetailed with former CEO Howard Schultz’s departure from the board of directors after 40 years with the company. Although Schultz literally handed the keys to the coffee kingdom to Johnson in spring 2017, the former chairman has remained a central figure to the brand and even spokesman at times, publically weighing in on company matters.
Ever the champion of causes, Starbucks did push new initiatives during the third quarter. Earlier this month it announced a “Signing Store” that would be led by deaf employees in Washington, D.C. and joined an industry-wide environmental movement by pledging to remove plastic straws from all 28,000 restaurants.
“Our commitment to eliminate plastic straws in all of our stores globally by 2020 is in direct support of sustainability of the planet. In the same way, our agronomists innovate on behalf of coffee farmers, our packaging teams along with partners have innovated to create strawless lids and alternative-material straw options. And we are also pursuing a broad approach to recyclable cups,” Johnson said on the call. “We have long espoused the importance of companies doing well by doing good, and we will not waver from our focus and leadership position in sustainability.”