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Starbucks will expand U.S. delivery, combating falling foot traffic by meeting customers where they already are.

WHAT HAPPENED: Starbucks will expand delivery via UberEats in the U.S. after testing the service in Miami and China.

Why it matters

  • Since the company has noticed fewer frappuccino-ordering faces at its coffee shops, it’s planning to meet them directly. Delivery for a beverage-focused brand comes with its own difficulties—drippage, sealing and temperature—which Starbucks has strived to address through its pilot programs. In early 2019, the service will be offered out of almost 25% of Starbucks’ 8,000-plus U.S. stores, not only meeting consumers where they already are, but providing the increasingly expected immediate gratification. In the long run, this move will be something to watch—likely delivery in the coffee space will increase and Starbucks will have to maintain a strong brand presence in the midst of competitors.

  • The coffee space has been brewed more competition for a while, with companies like JAB Holding purchasing Pret a Manger, Peet’s Coffee & Tea and Panera Bread Co. and Nestlé selling its poorer-performing brands to focus on Nespresso, Nescafé and others—moves that attempt to follow consumer trends, like the rise in cold and ready-to-drink beverages. For its part, Starbucks is pivoting to focused areas with high growth potential like delivery—and closing down less promising facets of its business. In terms of consolidating, it has closed all of its Teavana stores, cutting down its corporate staff. At the same time, the brand is pouring more time and money into improving customer service at its shops, selling packaged and single-serve coffee that’s compatible with Nestlé home brewing devices, and innovating cold drinks like nitro brew, which now make up about 50% of its business.

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