On January 22, after successfully testing a delivery service in Miami, Starbucks (SBUX) announced that it will expand the service to six more cities in the United States. In partnership with Uber Eats, the company will start the delivery service in San Francisco on January 22. In the following weeks, the company will expand the service to select restaurants in Boston, Chicago, Los Angeles, New York, and Washington, D.C.
In the fall of 2018, Starbucks started testing the delivery service in Miami in association with Uber Eats, which resonated well with customers. The repeat orders increased. The partnership with Uber Eats has helped Starbucks reach new customers who are already using the Uber Eats platform. The partnership has improved the convenience for existing customers.
Roz Brewer, Starbucks’s group president and COO, said, “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. 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.”
Customers can order from the Uber Eats mobile app. Customers will be charged $2.49 as a booking fee. Starbucks offers 95% of its core menu items for delivery. Customers can customize their orders.
Currently, the global online food delivery market is a $95 billion opportunity. The global online food delivery service is expected to grow 11% annually through 2023. The company is already offering a delivery service in 11 of its global markets. The company wants to initiate pilot projects in several other countries this year. Later in January, the company will start testing its delivery service in London, which will be the first delivery service in Europe.
On January 22, Starbucks was trading 0.3% lower in the pre-market hours. The weakness the broader equity market could have led to a fall in the company’s stock price. Starbucks’s stock price has increased 0.5% year-to-date. During the same period, McDonald’s (MCD) and Dunkin’ Brands (DNKN) have returned 2.8% and 7.5%, respectively. The boarder comparative index, the Consumer Discretionary Select Sector SPDR ETF (XLY) has returned 7.9%.
Starbucks is scheduled to post its first-quarter earnings for fiscal 2019 after the market closes on January 24. Read Can SBUX Overcome the Chinese Slowdown to Post Robust Q1 Results? to learn more.