Starbucks ramps up expansion efforts with focus on digital offerings

  • Starbucks announced plans to significantly drive up its global store presence.
  • And it's looking to make its digital offerings, such as its mobile app, a core part of this effort.
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The company announced plans to grow from its current 33,000 global stores to 55,000 by fiscal 2030. More than half of its new stores will be cafes, while 40% will be focused on drive-thru and 5% will be focused on pickup formats.

Starbucks also has its sights set on boosting its presence in China, with plans to introduce 600 new locations in the country by 2021, 10% of which will be express retail locations. The company is looking to expand its digital capabilities both online and in-store.

The chain's plans reflect pandemic-driven changes it made to accommodate the evolving dining environment. The coronavirus pandemic upended restaurant operations, forcing many to adapt their strategies to abide by pandemic regulations and fit  changing consumer habits. Starbucks initially shifted its strategy by emphasizing on-the-go experiences like curbside pickup, drive-thru, and mobile order-ahead—which has seen substantial acceleration in recent months.

Starbucks has an industry-leading rewards program that offers both order-ahead and in-store contactless payments, which it recently expanded to include a wallet functionality that lets customers add their debit cards, credit cards, and PayPal account to pay and redeem rewards at checkout. These changes have helped drive up digital sales: Mobile orders accounted for 24% of transactions in its fiscal Q4 2020 (ended September 27, 2020), up from only 16% of transactions in the same period last year.

Starbucks' latest efforts can help it capitalize on the increasing demand for digital offerings, which will likely remain post-pandemic. And if these initiatives pay off, Starbucks could set the tone for other quick-service eateries' future plans ahead of the forthcoming vaccine. Here's how it could benefit:

  • It can drive up usage of its mobile app, helping increase customer loyalty. Starbucks says it plans to use its mobile app to introduce targeted offerings and rewards to its customers, which should help boost volume and encourage repeat customers. The introduction of more order-ahead and walk-thru initiatives should also drive traffic to its mobile app—which is estimated to reach 30.3 million US users by the end of 2020, according to eMarketer forecasts (now part of Insider Intelligence)—helping the company increase digital sales.
  • And new in-person technology can help Starbucks boost overall volume. The chain is investing in AI—the initiative is called Deep Brew—to help store managers improve efficiency. The technology will focus on improving the customer experience and help with things like creating staff schedules and automating inventory management. The improvement of these back-end systems will help Starbucks deliver better customer service and enable it to boost its volume.

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