“We know we have untapped customer demand for Starbucks Delivers in the U.S. and starting today, we’re expanding our best-in-class experience to our customers both in and out of our stores,” said Roz Brewer, group president and chief operating officer for Starbucks. “We’re building on key learnings from past delivery pilots and by integrating our ordering technology directly with Uber Eats, we’ve unlocked the ability to bring Starbucks to customers for those times when they’re not able to come to us.”
Although Starbucks has had a partnership with Postmates since 2015, joining forces with Uber Eats will bring delivery to many new markets. And while past delivery options have been limited, 95 percent of Starbucks' menu will be available for delivery through Uber Eats. Starbucks promises orders will be delivered in 30 minutes or less, and delivery fees start at $2.49.
The explosion of online delivery services in the past few years has shaken up the food and beverage industry by including restaurants that couldn’t offer their own delivery. The market has grown steadily each year, and Swiss investment bank UBS predicts that delivery sales could be worth $365 billion by 2030. Although delivery is obviously a lucrative venture, it presents a logistical challenge for goods such as coffee, whose quality is susceptible to temperature and time.
“Starbucks is already extremely busy,” said Melissa Wilson, principal at Technomic, a food industry research firm. “They had some challenges when they rolled out mobile ordering because it strained their prep time, and most places do see a business bump when they introduce third party delivery, so that will be something they have to manage.”
Starbucks said it has accounted for this in its delivery methods, with specially designed trays and tamper-evident bags that help keep drinks at their appropriate temperatures. But the service is also a mixed bag for lower-priced items, as delivery might cost just as much as or even more than a customer’s order. Still, Wilson said customers drawn to delivery for its convenience aren’t likely to be put off by fees.
The Seattle-based coffee company is searching for ways to compensate for decreasing traffic in its domestic stores. Besides raising the prices of its drinks 1 to 2 percent last year, Starbucks is putting more emphasis on customer service and convenience, by adding more drive-through windows and making its app available to all customers, not just those who use the company’s rewards program. The focus on delivery is its next big step, but it’s unlikely to have a huge appeal with people who weren’t frequent Starbucks customers before, according to Bill Fahy, senior credit officer with Moody’s.
“Delivery has become something that you’re going to have to have in one shape or form,” Fahy said. “It may help with the weak traffic but it’s not going to solve the problem overall.”
Starbucks has been running a pilot delivery service in Miami since fall 2018, and the company said it had “strong demand,” including repeat business throughout the day. Service in Miami will continue, and a similar pilot program will be tested in London this month, as Starbucks looks to expand delivery to European cities. Starbucks has also operated a delivery service in China through a partnership with Alibaba since August. That service is now available in 30 cities across China.