Starbucks just quietly made a change that reveals the future of the company - here's how it works
- Starbucks now allows all customers - not just rewards program members - to order and pay using its app.
- A huge portion of the chain's recent sales growth has been from mobile sales, as traffic remains flat.
- We tried out the new mobile order-and-pay system - here's the step-by-step process of how it works.
Starbucks just quietly made a major change to its mobile order-and-pay technology.
Earlier this week, Starbucks made it possible for all customers to order using its mobile apps. Previously, only Starbucks Rewards members with money pre-loaded into their accounts could use the chain's mobile order-and-pay system.
The coffee giant has long maintained that its mobile ordering and payment system is crucial to its future. As the chain has struggled to grow traffic, almost all of its same-store sales growth has been from customers ordering via mobile as part of the Starbucks Rewards program.
"We have got 75 million people coming up through our doors each month, 15 million in the Rewards program," Starbucks CFO Scott Maw said at a JPMorgan forum earlier in March.
"What about the other 60 million?" Maw continued. "We know you will convert million or two every year into Starbucks Rewards, but what can you do beyond that?"
Maw said that people avoid signing up for the rewards program because they are unaware of the benefits or because they do not want to pre-load money onto their account. With the new "guest" checkout, customers don't have to pre-load money - but they also can't earn stars that rewards members can reimburse for free drinks or food.
While the rewards program encourages loyalty - and sales - more customers of any kind ordering via mobile is a major benefit for Starbucks. Getting more people to download the app means that Starbucks can personalize ads to a new set of customers, something Maw believes to be crucial to the future of the business.
"Obviously, we have the ability to capture their email address, to capture mobile phone information, and begin to market to them directly," Maw said.
Two people at Business Insider who did not previously have the Starbucks app gave the new mobile order-and-pay system a test run on Tuesday. Here's how the new system works.
Opening up the app, everything looks pretty much the same.
You don't need to be a member, but Starbucks still wants to send you notifications.
Personalized ads are crucial to growing Starbucks' sales. The chain is also doubling down on mobile notifications and personalized ads with its new, frequently changing Happy Hour deal, which Starbucks announced on Tuesday.
The change only becomes apparent during checkout.
Hollis Johnson/Starbucks app
After ordering your drink and/or food, customers are prompted to check out.
This is the stage where they are given the new ordering option: "Continue as guest."
Customers no longer need to pre-load money.
While Starbucks Rewards members pay using Starbucks "cards" that need to be reloaded, guests are able to check out without putting money on a digital card.
Customers can pay via credit or debit card, Chase Pay, Visa Checkout, or Apple Pay.
The new system still has a few bugs.
Hollis Johnson/Starbucks app
One Business Insider reporter testing the program was unable to place an order, despite trying two different credit cards.
However, the other tester was able to place an order as a guest. The pick-up process was identical to the typical mobile order-and-pay system - and just as speedy, taking less than five minutes.