SEATTLE — Point-of-sale, curbside pickup and a new “Stars for Everyone” reward program are three key initiatives expected to fuel Starbucks Corp.’s future recovery in the United States, said Patrick J. Grismer, executive vice president and chief financial officer of the Seattle-based company.
“We are very pleased with the upward momentum in our US business, but we still have a ways to go to fully recover sales in the US, and the overall operating environment remains somewhat uncertain,” Mr. Grismer noted in comments made virtually as part of the JPMorgan Gaming, Lodging, Restaurant and Leisure Conference on Sept. 15. “So prudently, we foresee another six months of recovery as previously outlooked, but we're very pleased with our progress thus far, and we're very optimistic for the future.”
Part of that optimism comes from Starbucks’ belief in its point-of-sale capabilities. Mr. Grismer said the company is in the process of piloting and refining its model for handheld POS so it can rapidly deploy it.
“We expect this to be a game changer for us in drive-thru,” he said.
Mr. Grismer said Starbucks was not originally designed to be a drive-thru concept. Drive-thru was added as a convenience measure. Now, with more consumers wanting even more personalization in their beverages, Starbucks is taking additional steps to accommodate.
“The fact is that given the profile of our menu, with beverages, they're hand crafted to customers' individual specifications down to how many pumps of syrup they want, how much ice they want, what kind of milk they want,” he said. “You're seeing customers are pivoting to plant-based milk, and we're able to provide that to them. But given the complexity of the builds, the wait times in the drive-thru line can be long.”
Mr. Grismer said Starbucks sees handheld POS as an opportunity to collect orders sooner in the lines, so it can start the production of those handcrafted beverages and be prepared to fulfill those orders more quickly than it is currently.
“And we know from our experience, because we do measure this, that when we improve drive-thru time, we reduce bulking,” he said. “We reduce line rejection. So we're better able to capture the demand that is out there. The last thing we want to have happen is someone drive up to Starbucks, see a long line and continue on their way.”
Mr. Grismer said a similar mindset is what makes curbside pickup such a critical part of Starbucks’ future recovery in the United States. Many consumers no longer want to wait in drive-thru lines and instead prefer ordering via a mobile app and then pull into a designated spot for pickup.
“(Curbside) is working beautifully,” he said. “That's taking pressure off the drive-thru, and it's accommodating more of that customer demand.”
The final initiative mentioned by Mr. Grismer is the launch of a new rewards program: Stars for Everyone, which he described as “a game changer.”
“That's how I think about it because as we have researched ways of capitalizing on the enormous success of our Starbucks Rewards program, time and again, what has surfaced in our consumer research is that the No. 1 point of friction, what prevents customers who love Starbucks from joining the program, is the requirement to prepay on a stored value card,” he said. “So with Stars for Everyone, we are removing that barrier. And now all customers who use their mobile phone to place orders, who register as a member of Starbucks Rewards and register a credit card or a debit card, can pay with that credit card or debit card, not a stored value card, and earn stars.”
He said Starbucks expects those customers who sign up for Stars for Everyone will visit more and spend more.