Starbucks’ US Loyalty Membership Increases 15% Despite Watered-Down Rewards

Despite initial pushback to Starbucks’ recent changes to its rewards structure, consumers continue to engage with the program, suggesting that loyalty apps can be effective even as brands become more tight-fisted to cut costs.

The coffeehouse giant Tuesday (May 2) in its second quarter FY2023 financial results that throughout the quarter, even with these changes in effect for most of the quarter, the Starbucks Rewards app continues to gain in popularity. In fact, its active membership in the U.S. rose 15% year over year to nearly 31 million.

On a call with analysts, Laxman Narasimhan, the brand’s new CEO as of March, noted that the brand also saw a record-high mix of loyalty app transactions.

“Rewards members accounted for 57% of U.S. company operating revenue in Q2 which marks the highest contribution on record and represents growth 3% on a year-over0year basis,” Narasimhan said. “We are excited about our growth in active rewards members, as it’s a contributing factor in consistent demand. We have been the vanguard in this area, and you can expect us to further invest and lead.”

This growth suggests that, even as consumers chafe against reduced discounts, they will still take their rewards where they can. Starbucks Reward’s changes, implemented in February, included doubling the number of points, or Stars, it takes to earn brewed hot coffee, bakery items and hot tea while decreasing by a third the number of stars required to earn iced coffee and iced tea. Overall, consumers have generally understood these changes (per their complaints on public platforms) to be a devaluation.

Certainly, consumers will take discounts where they can get them, with an increasing number looking for rewards and coupons. According to data from PYMNTS’ study “Connected Dining: Consumers Like the Taste of Discount Meals,” which drew from a survey of more than 1,800 U.S. consumers, the share of diners who had paid a reduced price on their most recent restaurant purchase skyrocketed from 14% to 26% from March 2022 to February 2023.

Demand for discounts and rewards is even greater for quick-service restaurants (QSRs) such as Starbucks. Indeed, the study found that while 49% of consumers reported using loyalty programs at QSRs, only 34% did the same at full-service restaurants (FSRs).

Consumers’ continued engagement with Starbucks despite these changes to its rewards is somewhat surprising, given that diners expect greater discounts at QSRs than FSRs. The average amount taken off the price of a discounted meal at a QSR amounted to 25%, while for FSRs it was a slightly lower 22%.

However, diners continue to engage with the Starbucks app more than nearly any other restaurant’s mobile platform. Data about app usage featured in PYMNTS’ Provider Ranking Mobile Order-Ahead Apps gives the coffeehouse chain’s platform an app the No. 1 app usage score, though it shares the top spot with QSR chains Domino’s and Taco Bell. The score figures in the number of active users each month as well as the average time users spend on the app.