Sunday, 9 August 2015

Digital ordering comes to Starbucks

A lesson that I’ve learnt as an investor and consumer is the power of digital ordering. The restaurant industry has benefited from smart phones allowing us to order on the go. The innovator in Australia has been Domino’s pizza. Their mobile application is a better customer experience compared to ordering over the phone. You can order on the way home, track the progress of your order and driver and once downloaded you were likely to keep reordering with Domino’s.



I see a similar opportunity in Starbucks as they roll out digital ordering this year in their 13,000 US stores. It’s great ordering coffee ahead of time there’s no waiting in line and you save time in the morning rush. The app will ask whether you’re driving or walking to better estimate when your coffee will be ready at the closest store. The introduction of drive thru at Starbucks grew revenue incrementally by 50%.

Digital ordering will have a significant impact decreasing wait lines while increasing sales at peak hour. Like Domino's once Starbucks's app is downloaded you’ve customised and saved your order that will likely be the coffee application on your phone. It’s a win for the customer and the company.

Starbucks is also trialing coffee e-commerce. Testing coffee delivery straight to your desk at the Empire State building. It's likely to be only available in major cities but it really is e-commerce on "caffeine"!

Jason


Decisive has a long position in Starbucks (SBUX) stock. The material in this article is for informational purposes only and in no way constitutes a solicitation of business or investment advice. The material has been prepared without regard to any client's or other person's investment objectives. Before making an investment decision you should consider the assistance of a financial adviser and whether any investment or service is appropriate in light of your particular investment needs.