Starbucks launches mobile order and pay services in China

Starbucks China on Tuesday launched its mobile order and pay services in an aim to help reduce long waits in the store and provide a diversity of services amid a fiercely competitive coffee chain market, where new riser Luckin Coffee plans to accelerate its expansion after being publicly listed in the United States last week.

The service has first been introduced in key stores in prime locations in Beijing and Shanghai, and it will cover about 300 stores in the two cities by the end of this month and gradually become available nationwide.

Dubbed as Feikuai, or Coffee Now, the Seattle-based coffee chain said the move is part of its delivery service and is designed to shorten the longer waiting times.

The service is available on its application, so customers can order their drinks online and pick them up in-store with their personalized taste options chosen.

Belinda Wang, CEO of Starbucks China, said the new service is not simply a copied concept or purely a technology update; it reflects how the company listens and responds to customer feedback on its mobile ordering services.

Wang Zhendong, chairman of the consultancy firm Shanghai Feiyue Investment Management, said, in the face of pricing challenges brought by competitors such as Luckin Coffee, Starbucks has to offer more breakthroughs and innovations, as well as more accurate services to please consumers in order to maintain profitability.

However, the new tool, which requires more operational efficiency, could mean new challenges -- in-store congestion created by increased orders.

The arrival last month of Starbucks' summer beverage series, which differ from the standard procedures in making coffee, has made operations more complicated, said Wang.

Starbucks' main challenger in China, Luckin Coffee Inc, made its US market debut on the Nasdaq on May 17 and priced its IPO at $17. Then, Luckin Coffee stock opened at $25, up nearly 50 percent from its IPO price. It traded at $18.61 on May 20.

Starbucks hit another all-time high on Friday, closing at $78.91, up more than 35 percent from a year ago.

Luckin, which was founded less than two years ago, now has 2,370 stores in 28 Chinese cities and said it will open 2,500 additional stores this year.

Starbucks has 3,800 stores in China and opens a new store roughly every 15 hours, with an aim to have 6,000 sites in China by 2023.