Starbucks speeds up Mobile Order & Pay rollout

Starbucks (NASDAQ:SBUX) is picking up the pace and plans to accelerate the rollout of its mobile order and pay service to all U.S. stores by the end of September. The Mobile Order & Pay feature, only available to iOS users thus far, will also be extended to Android users beginning this month.

Mobile Order & Pay has been exceeding expectations during every step of the test phases, according to Scott Maw, Starbucks' CFO.

"We will continue to accelerate investment where we have a winner and we know what's working, we won't hesitate to lean in," Maw said during the Goldman Sachs retail conference. "We're accelerating the Mobile Order & Pay rollout, we'll have all company-owned stores rolled out by the end of this month including right here in New York—so very soon you'll be able to call up a menu and place an order from a conference right at the end of my very interesting and exciting comments and then swing down and pick it up."

Starbucks initially tested the feature—which lets users order items via mobile device, pay in advance and collect purchases at a designated location inside the store—in Portland, Oregon, in July 2014. The test was quickly expanded to 650 locations in the Pacific Northwest, and then extended to 4,000 company-owned stores in two additional regions, according to Nation's Restaurant News.

"We know we have a winner, and it's running ahead of our expectations," Maw said.

Starbucks is also working toward providing more customization through the app by showing users the menu for their preferred store, as not all locations carry the full array of items.

Up next for Starbucks is delivery and analyzing the data now coming in from Mobile Order & Pay users. The company is now able to track time of day and could leverage promotional offers to drive traffic at slower times. This strategy is similar to the coupons printed on register receipts that encourage customers to return later that afternoon for another beverage or snack. Already, customer satisfaction is measurably higher as a direct result of the mobile feature.

And while Starbucks' busiest stores are experiencing the highest volume of mobile orders, the company has been able to place additional associates at the point of product handoff to alleviate any strain on the locations, Maw said.

Mobile Order & Pay is expected to drive loyalty as well. "I would argue that Mobile Order & Pay and ultimately delivery is a great extension of My Starbucks Rewards and will drive increased acquisition and retention as we add more and more benefits," Maw said. "Starbucks rewards is really moving beyond the earn free drink... and adding more and more functionality and capability, and that should drive up membership."

Starbucks is already moving toward establishing its mobile loyalty rewards, or stars, as a new kind of currency.

For more:
-See this Goldman Sachs conference transcript on Seeking Alpha
-See this Nation's Restaurant News article

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