Mobile Order and Pay continues to deliver for Starbucks

Starbucks ended its fiscal year on a high note, at least in terms of revenue.

Total sales rose by 10.6% for the fourth quarter, supported by a healthy uplift of 7.9% in the Americas. Same-store sales growth in the US was similarly robust, rising by 4% - the best outcome in over a year. On the bottomline, things were not quite so healthy as operating income fell by 6.4% and net earnings by 4.1%. Much of this was down to higher salary costs and some organisational changes related to the deal with Nestlé and an ownership change in East China.

The Starbucks Rewards loyalty programme grew to 15.3 million active members in the US, up 15% year-over-year. Whilst its Mobile Order and Pay offering represented 14% of US company-operated transactions.

Meanwhile, the ongoing remodelling and refurbishment of stores are encouraging more consumers to linger for longer, notes Neil Saunders, Managing Director of GlobalData Retail. This, in turn, stimulates them into spending more, including on food items.

“We still maintain our view that Starbucks has a lot more work to do on refining its foodservice proposition, but the store changes are a necessary first step that will give the company a platform to offer a more premium and comprehensive food offer,” says Neil Saunders, Managing Director of GlobalData Retail.

“The final piece of the jigsaw comes from pushing the afternoon daypart much harder, primarily from loyalty-based discounts and offers. We believe this has stimulated more purchasing, especially from larger groups wanting to take advantage of the 'happy hour' deals. Again, there is more work to be done on bolstering the afternoon and early evening dayparts, but for now, this is a good first step that appears to be paying dividends.”