Starbucks starts delivery service in US

To fight falling foot traffic at its US stores and stay ahead of rivals, Starbucks has launched a delivery system for its hot coffee.

The coffee giant is hoping that its new service via smartphone app will bring in new customers, win back old ones and fend off competitors, including McDonald's, Peet's Coffee and Dunkin' Donuts.

"Starbucks Delivers'' began on Tuesday in San Francisco and will expand to Boston, Chicago, Los Angeles, New York and Washington. The company said it had a successful pilot effort in Miami and will launch another one in London this month.

Most of its menu will be available for a delivery charge of $2.49, to be delivered in 30 minutes or less. Starbucks will keep the coffee hot by using specially designed trays and bags that regulate the temperature.

Starbucks will use Uber Eats as its primary delivery service, despite having been in a partnership with Postmates to deliver since 2015.

"We know we have untapped customer demand for Starbucks Delivers in the US," said Roz Brewer, group president and COO for Starbucks.

Hannah Spencer, a food service analyst for global marketing research firm Mintel, told China Daily that continued growth in delivery services proves that it isn't a fad "but an industry shift that restaurants, such as Starbucks, must adapt to or risk losing relevancy".

In the last quarter of 2018, Starbucks opened 604 new locations, added more drive-throughs and raised its prices 1 to 2 percent to make up for decreasing sales at its stores.

Starbucks is not just looking at delivering in the US. It is planning a global delivery service to tap into the $95 billion online food-delivery market, which is projected to grow 11 percent annually by 2023.

It has delivery initiatives in 11 regions: Chinese mainland, Japan, India, Hong Kong, Singapore, Indonesia, Vietnam, Mexico, Colombia and Chile.

Starbucks Delivers also has been in operation in China since August and offers deliveries in more than 1,100 stores in 30 Chinese cities through a partnership with Alibaba.

On Thursday, Starbucks reported quarterly earnings that beat analyst estimates in the key Americas and Asia-Pacific regions. Comparable sales — a key metric for retailers — rose 4 percent in the Americas. Same-store sales in China gained 1 percent, marking the second-straight quarter of growth after a decline last spring raised concerns about the region.

Even though comparable sales in the quarter were up slightly, transactions fell, suggesting higher prices — not more visits — are propping up results, according to Bloomberg.

Starbucks plans to build 3,000 new stores in China over the next few years. The Seattle-based coffee giant, which started with just one location, now has 29,000 stores worldwide.

However, Starbucks faces stiff competition in China from Tencent and its partner Luckin – a coffee and bakery chain that began operations in 2017.

Starbucks "does not equal coffee in China, and neither is it the sole contender", said CEO Qian Zhiya.

China's coffee consumption was up by 16 percent a year over the past decade, according to the International Coffee Organization. The coffee market in the Asian country was worth $4.5 billion in 2017, according to Euromonitor.

Contact the writer at belindarobinson@chinadailyusa.com