Starbucks’ dominance in the mobile ordering market became evident once again during the company’s second quarter earnings release yesterday (April 21), when the coffee giant revealed it is now seeing an average of 8 million monthly transactions for its Mobile Order & Pay service.
To put that into context, that’s 2 million more, on average, per month than Starbucks reported it was seeing in Q1. Overall, Starbucks is also seeing a jump from quarter to quarter in terms of how many of its total transactions are being made via mobile. In Q1, Starbucks reported that mobile transactions made up 21 percent of its total payments, and by Q2, that figure had grown to 24 percent.
Mobile Order & Pay usage doubled year over year, Starbucks reported.
What Starbucks has proven as a business is that it’s managed to take one of its greatest strengths — loyalty and customers dedicated to a daily habit — and monetize it with a service aimed at making the transaction and ordering process easier, which is, of course, via mobile.
“Loyalty, technology and innovation are continuing to fuel our digital flywheel and propel our business forward all around the world,” said CEO Howard Schultz.
Of course, that loyalty may go through a transition period after Starbucks created some consumer backlash when it changed up its rewards program to favor amount spent over amount of drinks bought. But Starbucks’ leadership team noted during its earnings call with analysts that it does not expect to see a significant impact on sales as a result of that change.
Starbucks’ Q2 results showed that its rewards program has grown 16 percent in a year’s time and now totals 12 million members. Membership in the company’s Starbucks Rewards loyalty program increased 8 percent in Q2 versus Q1. The company has added 900,000 Starbucks Rewards members since Q1 alone.
Overall, on the earnings side, Starbucks reported that comp. store sales were up 7 percent in the U.S. and 6 percent globally. Revenues are up 9 percent to a record for Q2 — $5 billion. Transaction growth overall was up 5 percent. Operating income increased 11 percent to $864 million.