Now That Starbucks Iced Pumpkin Spice Latte Will Come to You

CEO Howard Schultz Calls Delivery 'E-Commerce on Steroids'

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Howard Schultz
Howard Schultz Credit: Mario Tama

Starbucks will not only allow customers to order and pick up their food and drinks without waiting in line -- some people won't even have to leave their chairs to get their coffee and scone.

Starbucks in December will roll out its new mobile-payment and ordering app in Portland, Ore. that allows customers to walk in a Starbucks store and pick up their order without waiting in line. A national rollout is planned for 2015. Starbucks in the latter half of the year will also begin to make food-and-beverage delivery available in select markets. Delivery will be available to loyalty-program members as part of the new app.

The move comes as the coffee giant seeks to adapt to what CEO Howard Schultz called changing consumer behaviors. During the company's quarterly earnings call Thursday afternoon, Mr. Schultz called the mobile app "the single most important technology innovation" the company will make this year. The company did not detail the markets in which delivery would be available, whether it will eventually be offered nationwide, or how the logistics of it would work -- but Chief Strategy Officer Matthew Ryan noted the chain is moving "full speed ahead."

"Imagine the ability to create a standing order of Starbucks delivered hot to your desk daily," Mr. Schultz said. "That's our version of e-commerce on steroids."

Mr. Schultz added that the mobile payment and order capability was a "totally unique technology" because it "seamlessly integrates mobile ordering in our proprietary loyalty program with point-of-sale and store operations, enables us to enhance our customer experience, exceed our customers' expectation of convenience and extend customer loyalty."

Mr. Schultz went on to tout Starbucks' early adoption of mobile retail technology, claiming that 90% of U.S. mobile transactions are made at Starbucks. "In 2013, payment for purchases by use of all mobile devices in the U.S. totaled $1.3 billion. That was the entire market," he said. "Now listen to this. With over 90% of those purchases taking place in a Starbucks store, that means we had 90% share of mobile payments in 2013, while bricks-and-mortar commerce in 2013 totaled more than $4.2 trillion." The company earlier this year said that 15% of sales in its U.S. stores are done through its app.

Via the Starbucks app, customers could use their phones to pay as well as reload their Starbucks cards and redeem rewards. Starbucks had been ahead of the mobile game in many ways, but other chains have been catching up lately. Taco Bell just this week unveiled its mobile-ordering and payment app, and blacked out all its social media channels to encourage consumers to download it.

Wendy's in March introduced a payment-by-app nationally, but the chain has said it's working on a more sophisticated location-based option that will integrate a loyalty program. Burger King this year also said it was expanding its mobile-payment offering. McDonald's recently announced deals with Apple Pay and has been tinkering with its own payment and ordering-app tests.

In general, U.S. mobile payments are expected to keep rising. Forrester Research estimates that the mobile payments markets in the U.S. will reach $90 billion by 2017.

Starbucks' global same-store sales increased 6%, as did same-store sales in the Americas for the most recent quarter. The company recently launched its first global campaign, "Meet me at Starbucks," which aims to highlight the coffee giant as a gathering place.

Contributing: Mark Bergen

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