Starbucks: More Than 30 Percent Of All Transactions Use Starbucks Card

More than 30 percent of all Starbucks (NASDAQ:SBUX) customers use the chain's stored-value card—and 10 percent of all U.S. shoppers use the chain's mobile app to make purchases—according to comments made Tuesday (June 18) by Starbucks CFO Troy Alstead.

It's been well established that Starbucks has made more progress with its mobile and card programs than any other chain, but no figures had been released until Alstead's speech at the Jefferies Global Consumer Conference.

Alstead also referenced the chain's CRM program and said 25 percent of all shoppers use that program. In many ways, there is a lot of overlap between the programs. A shopper has a cardboard Starbucks card (stored value) with a barcode on the back. The mobile simply shows a picture of that same barcode. If the shopper goes online and registers the card, then that same card is now also acting as a CRM card.

Alstead, who also serves as the chain's chief administrative officer (CAO), also touched on nontraditional Starbucks efforts, such as having a Starbucks store that literally moves with its shoppers. "It's a train car that's actually in the Swiss Train System: an entire Starbucks store that will travel with that train and we're very excited about that opportunity," he said.

That is a compelling idea. It's a trainload of consumers whose main choice for coffee (and related items) is the Starbucks store on the train or whatever the train offers. (Insert obligatory line about Starbucks truly embracing mobile commerce. Either that or a reference to this being a new Starbucks training program. Folks, we got a million of 'em.)

Speaking of coffee supplemental items, Alstead also revealed how Starbucks' food program is proceeding. "In the U.S., food is about 19 percent of the sales mix within a store. Approximately one-third of our transactions in U.S. stores have a food item on them. Two-thirds of those transactions do not have food on them and that really represents the opportunity as we see it," he said. "Of those two-thirds of the people, 50 million to 60 million customers coming into our stores every week, many of those two-thirds of the people want food. We've already acquired that customer. They have come in the store, they're interested in food, they're ready to give us money."

Alstead said the chain has had to deal with two hurdles. First, the food usually didn't taste very good. "Our food often historically has not met their expectations. It's not been up to the quality they expect when they come into Starbucks," he said.

The second hurdle is that the food wasn't appropriate to the time of day, such as an absence of lunch offerings. The CFO said both problems are now being addressed.

Given Starbucks' coffee-only reputation, the fact that it's selling food to one out of every three customers is pretty impressive.

For more:
- See the Seeking Alpha transcript

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