Starbucks announced Thursday a national partnership with Grubhub as the coffee chain looks to onboard more customers amid softer sales and traffic.
The launch will start this month in certain markets in Pennsylvania, Colorado, and Illinois. Nationwide expansion is expected by August. The quick-service giant is the most-searched merchant not yet available on Grubhub.
“Customer demand to get Starbucks delivered continues to increase, as evidenced by double-digit growth in the U.S. delivery business this past quarter, indicating that our customers continue to want convenience in their everyday lives,” Meg Mathes, Starbucks’ vice president of digital experiences, said in a statement. “Our new partnership with Grubhub will help fuel this growth by increasing availability of Starbucks products to Grubhub’s tens of millions of customers, via a leading delivery provider.”
Starbucks’ delivery business grew by double digits in the U.S. during its fiscal second quarter, fueled by ticket and transaction growth.
Most of the menu will be available on Grubhub’s platform, including seasonal drinks and food. Consumers can also customize orders on Grubhub (choosing amount of espresso shots, flavor, type of milk, and espresso roasts), similar to what they would do on Starbucks’ mobile app and website. The brand has developed packaging solutions to ensure portability, including two-cup to-go trays and enhanced shopper bags that help delivery drivers transport multiple beverages at the same time.
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Grubhub accounted for 8 percent of food delivery sales in March, according to Bloomberg Second Measure. The company trailed DoorDash (67 percent) and Uber Eats (23 percent).
“By joining forces with a beloved national brand like Starbucks, we’re offering customers more of what they want on Grubhub while strengthening our enterprise offering and growing our merchant supply in markets nationwide,” Liz Bosone, Grubhub’s VP of enterprise, said in a statement. ”We’re proud to offer national and independent restaurants on our platform — a complementary duo — to give customers more choices and build loyalty.”
For Q2, Starbucks reported its worst traffic performance outside of the pandemic and the Great Recession, with a 7 percent drop in traffic and a 3 percent decline in same-store sales. Revenue fell by 2 percent to $8.6 billion, missing Wall Street’s expectation of a 5 percent increase. CEO Laxman Narasimhan acknowledged the disappointing performance and cited external pressures like cautious consumer spending and January weather impacts as contributing factors. A significant issue was the high order incompletion rate in mobile orders due to long wait times, causing potential sales losses. This highlighted the ongoing friction in Starbucks’ operational capacity to meet demand. Starbucks is working to improve throughput and customer experience by implementing the Siren Craft system, which optimizes store operations. This system includes new kitchen layouts and equipment like custom ice dispensers, faster blenders, and the Clover Vertica coffee system. These innovations aim to enhance efficiency and reduce wait times, with plans to roll out to 10 percent of North American stores by year’s end.
Despite challenges, Starbucks sees opportunities in new dayparts, product innovation, and targeting occasional customers. The brand plans to invest $600 million over the next three years to further digitize stores and better target customers through personalized deals. Additionally, Starbucks will expand its menu with more plant-based options and healthier choices.
The company ended the period with 16,600 units in the U.S.