Starbucks partners with Uber Eats to deliver to customers

Starbucks is the latest restaurant company to get into delivery.
The coffee giant said Thursday it would partner with Uber Eats to bring its lattes to customers’ doors.
“In locations where drive-thru isn’t feasible we are testing platforms like delivery,” Roz Brewer, chief operating officer, said, during the company’s investor meeting in New York.
Starbucks already has a delivery program in China, which caters to 2,000 stores across 30 cities. Through Uber Eats, the company expects to bring Starbucks Delivery to about a quarter of its U.S.-based, company-owned stores by the end of the second quarter.
Starbucks has been struggling to get diners to frequent its cafes at a higher rate. Although sales have been positive, foot traffic continues to stagnate. Part of the issue is the more than 14,000 U.S. locations that the brand operates. Having so many locations can cannibalize sales and lead to fewer transactions at individual stores.
The company has also faced issues connecting with its diners, who have recently balked at some of Starbucks’ limited time offerings.
Delivery is yet another lever that Starbucks can pull in order to lure diners to spend more money at its cafes. Digital and mobile orders tend to bring in a higher check for restaurants and delivery orders tend to be predominantly be placed through these channels. Adding another layer of convenience for customers to order from Starbucks could help right the ship.
Other quick-service chains like McDonald’s and Yum Brands, which owns Taco Bell, KFC and Pizza Hut, have also jumped into the delivery game, partnering with Uber Eats and Grubhub, respectively.
The pilot program began in Miami, CEO Kevin Johnson told CNBC ahead the meeting. Starbucks saw the transaction volume was there and that people wanted the service, he said.
However, Johnson said, not all drinks will be available for delivery as they may not travel well. He cited a cappuccino with a lot of foam as an example of a drink that might be suitable for delivery.
“We were very thoughtful about this,” Johnson said.
In China, Starbucks has created spill-proof lids for both hot and cold beverages, tamper-proof packaging and delivery containers that keep hot items hot and cold items cold, said John Culver, president of international channel development and global coffee and tea.
The investor meeting is Johnson’s first since he became CEO.
Johnson said his focus is on “doing what Starbucks does best, and creating big strategic partnerships that complement what we do best from Alibaba to Nestle with the Global Coffee Alliance and now Uber Eats.”
Starbucks shares were trading up about 1 percent Thursday afternoon. The stock, which is valued at nearly $83 billion, has gained 16 percent since the start of the year.
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