The Seattle giant’s nationwide U.S. delivery debut is coming after tests with Uber Eats in Miami and Tokyo and after learning from its key growth market, China, where Starbucks has expanded delivery to 2,000 stores across 30 cities in just three months via a partnership with an Alibaba delivery unit, Starbucks said Thursday. (Starbucks previously conducted a delivery pilot test in its Seattle home market with Postmates in 2015 that ended in 2016, a Starbucks spokeswoman said.)
Starbucks also said it plans to roll out its Nitro Cold Brew to all U.S. company-operated stores by the end of fiscal 2019 to meet growing consumer demand.
In addition, to show it still has the upscale flair to compete with the growing crop of specialty coffee shops like Blue Bottle Coffee, the company on Friday opened a 23,000-square-foot Starbucks Reserve Roastery in New York’s posh Meatpacking district, its second such U.S. location (after Seattle) and fourth globally. As part of the “immersive coffee experience,” the megastore roasts coffee beans on site and has a bakery as well as a bar that serves alcohol.
But among Starbucks’ various growth initiatives to combat a lower long-term profit outlook that sent its stock lower on Friday, delivery may well give its sales the biggest kick. Why? In the past two years, U.S. mobile orders for delivery and pay at Starbucks' U.S. company-owned stores have more than doubled to 12% of those stores' total sales, from 5%. That outpaced the growth in drive-through sales, which increased to 37% of the total, from 34%, during the same period, Starbucks said Thursday. Meanwhile, orders made at brick-and-mortar cafés declined to 51% of the business, from 61%.
With time-starved consumers increasingly demanding convenience, Starbucks is riding the delivery wave, a big bright spot for the entire food and beverage service industry. Companies from McDonald’s to the more upscale Cheesecake Factory have partnered with delivery apps including Uber Eats and DoorDash to service delivery orders. McDonald’s CEO Steve Easterbrook, for instance, said in October that delivery is “becoming an increasingly meaningful contributor” to the fast food giant’s comparable sales growth.
McDonald’s was already offering delivery from over 15,000 global restaurants, “substantial growth” from the end of 2016. Also through a partnership with Uber Eats, 9,000 McDonald’s in the U.S. will offer delivery by the end of this year, Easterbrook said.
Industrywide delivery sales could rise an annual average of more than 20% to $365 billion worldwide by 2030, from $35 billion, according to a UBS report this year. UBS also described a scenario in which, by 2030, most meals currently cooked at home would instead be ordered online.
Echoing that point, an NPD Group study released this week showed that as more consumers are staying home or working from home, an increasing number of their at-home meals is ordered in. In the year through September, dining at a restaurant was flat from last year, representing 37% of all visits. Restaurant meals consumed in-home, on the other hand, drove restaurant visits by 2% and now account for 32% of all sector traffic, according to NPD.
“I, for one, can’t wait,” a friend told me when I mentioned that Starbucks will soon do delivery. She added that there’s no Starbucks within easy walking distance of where she lives in New York. “I’m too lazy and busy to even walk one block to the Starbucks nearest to the office.”
But as much as she's excited about the prospect of getting her weekend frappe craving easily satisfied in the comfort of her home, there’s one potential deal breaker: “I hope they don’t charge too much, though. Uber Eats in the past has been pretty expensive, so I stopped using.”
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