Starbucks will offer delivery in select cities next year
Starbucks said it will offer a delivery option on its mobile app in select areas of the US starting next year. Starbucks previously said it plans to let customers across the country place orders ahead of time on their smartphone by next year, an option intended to get people in and out of stores quicker.
Ted S. Warren/AP/File
The Seattle-based company declined to provide more details, but has been pushing to get people to use its app as a way to build customer loyalty. It also previously said it plans to let customers across the country place orders ahead of time on their smartphone by next year, an option intended to get people in and out of stores quicker.
"We are playing offense," CEO Howard Schultz said in explaining the various steps the company is taking to adapt to changing customer habits, including their move toward online shopping and away from brick-and-mortar stores.
The delivery plans for the second half of 2015 were announced by Schultz during a conference call Thursday discussing the company's fiscal fourth quarter results. For the period ended Sept. 28, Starbucks reported sales that rose but fell short of Wall Street expectations. Global sales at established locations rose 5 percent, including in the Americas and Asia.
Starbucks Corp. is pushing aggressively into different areas as it faces more competition from fast-food chains serving specialty coffees. To boost sales of food in the afternoon, for instance, it has been revamping its sandwiches and adding new offerings like a grilled cheese sandwich that's warmed up in an oven.
In an effort to boost its lagging holiday sales, Starbucks also introduced a new seasonal Christmas drink, the Chestnut Praline Latte. As the Christian Science Monitor reported last week:
It's the Seattle-based chain's first new holiday drink in five years, joining the Gingerbread Latte and the Peppermint Mocha in a growing lineup of seasonal holiday coffee drinks.
For those of you unfamiliar, a chestnut is the big round thing in your unshelled nut mix that looks like an acorn. Praline is a hard sugar candy made from nuts and hardened sugar syrup, sometimes caramel-flavored. Now, in the Starbucks fashion, they will be available to all in liquid form.
The holiday coffee drink trio seems to be part of Starbucks' ongoing campaign to dominate our favorite seasons. It conquered Fall long ago with the Pumpkin Spice Latte, which has become as synonymous with the season as colorful leaves and college football. Since launching the drink a decade ago, Starbucks says it has sold over 200 million Pumpkin Spice Lattes, and its success has prompted the inclusion of pumpkin spice flavoring into virtually every conceivable food, including pancakes, bagels, bacon, and even Pringles potato chips.
This summer, Starbucks also launched its Fizzio soda drinks in the Sunbelt. But Wells Fargo analysts said in a note this week that their checks at a dozen stores in six states suggested the drinks aren't performing up to expectations so far.
In a phone interview, Chief Operating Officer Troy Alstead said the soda drinks are doing "exactly what we expected it to do," but that a national launch isn't planned for 2015. In a previous interview, Alstead had said he expected the drinks to be in much of the U.S. by the upcoming summer.
Alstead said Starbucks is instead focusing on growing its tea business. He said tea accounted for a "high single digit" percentage of sales last year, and that the company expects it to reach "well into the teens" over time.
For the quarter, Starbuckst earned $587.9 million, or 77 cents per share. Not including one-time item, it earned 74 cents per share, which was in line with Wall Street expectations, according to FactSet.
Revenue came in at $4.18 billion, short of the $4.24 billion analysts expected.
For the current quarter ending in December, Starbucks expects its per-share earnings to range from 79 cents to 81 cents. Analysts expected 83 cents per share. The company expects full-year earnings in the range of $3.08 to $3.13 per share.
Shares of Starbucks were down 4 percent at $74.04.