Starbucks Seeks New Partners to Caffeinate Rewards

Starbucks plans to partner with additional companies for cross-brand rewards, driving customer acquisition and engagement for both parties.

The coffeehouse giant, the world’s largest restaurant chain by revenue, shared Thursday (Nov. 3) on a call discussing the company’s fourth-quarter fiscal year 2022 financial results that the its recent rewards partnership with Delta Air Lines is the first such collaboration of more to come.

Interim CEO Howard Schultz noted on an earnings call that the program, Reward Together, allows “a select group of leading brands” to connect their rewards programs to Starbucks’ in a move to “engage and reward members of both brands with new benefits and experiences,” which will in turn “drive membership and increase customer lifetime value.”

“The Reward Together program is about taking like-minded leading loyalty programs and linking them directly to Starbucks Rewards,” Chief Marking Officer Brady Brewer added on the call. “We’re looking at a number of leading brands. And so, this is creating a direct tech-to-tech connection to link our loyalty programs.”

He said the demand for account-linking has been “overwhelming relative to our expectations.”

Starbucks is something of a leader in the restaurant loyalty space. Schultz noted that, in the United States, the company’s loyalty program members contributed “a record 55%” of revenue, way over-indexing relative to the general restaurant customer population.

In contrast, according to data from the March/April edition of PYMNTS’ Digital Divide series, “The Digital Divide: Regional Variations in U.S. Food Ordering Trends and Digital Adoption,” which drew from a survey of more than 2,500 U.S. adults who regularly purchase food from restaurants, just 30% of restaurant customers reported having used a loyalty program in the prior 30 days.

Indeed, PYMNTS’ Provider Ranking of Mobile Order-Ahead Apps, which uses a proprietary combination of publicly available information and app usage data to which PYMNTS has access to rank restaurants’ mobile order-ahead apps each month, has Starbucks in a three-way tie for second place, just behind Dunkin’ in first.

Additionally, the brand saw its base of active loyalty members grow 16% year over year, and Mobile Order & Pay reached 26% of orders in the quarter, 25% for the full year.

This share is more than double the industry-wide average. Research from the September edition of PYMNTS’ Digital Divide study, “The 2022 Restaurant Digital Divide: Food Aggregators Find Their Footing,” based on a survey of more than 2,200 U.S. consumers, found that, overall, 10% of restaurant orders are placed online through a restaurant’s app or website.

In addition to investing in its consumer-facing mobile offerings, Starbucks has also been looking to drive efficiency and improve the employee experience (in the face of ongoing reports of dissatisfaction) with an internal mobile app.

“We’ve … launched the pilot of a new partner app designed to create one digital community for our 270,000 U.S. and Canada company-owned operated store partners,” Frank Britt, executive vice president, chief strategy and transformation officer, said on the call. “Over time, this new digital platform will allow partners to stay connected on what matters to them most, including their schedules, their benefits and continuing to use their voice to drive the co-creation of Starbucks.”