Delivery has been successful for Starbucks in China, and it made up 6 percent of the company’s sales in the country last quarter, according to a report by CNBC.
The company is pointing to the model as an example of how fruitful delivery can eventually be in America. Shares in the company surged 6 percent on Friday (July 26), and reached $97.22 a share. The company beat estimates for the quarter and raised its outlook for the year on the news.
Also, Starbucks reported that sales in the U.S. grew by 7 percent, although delivery was not a major factor.
“We’re optimistic about it in the long term, but this quarter it did not contribute meaningfully to our comp results, but we do think in the future it’s going to be a growing part of it — and that’s why we’re investing in it,” CEO Kevin Johnson said.
Companies like DoorDash and Grubhub have become increasingly popular as they continue to provide an avenue for restaurants to reach more customers. In the U.S. in 2018, consumers spent $10.2 billion on delivery services. Drinks remain a smaller segment of that market.
Johnson said the delivery market for Starbucks is still in its infancy in the U.S., but that the company plans to partner with Uber Eats in early 2020. Right now, there are only 11 markets in the country that have the option for Starbucks delivery.
The market in China is much more advanced, and the company is seeing dividends from its partnership with eCommerce company Alibaba.
“In China, we saw roughly 6 percent of our total sales was driven by delivery in China,” Johnson said.
The company has even made changes to its packaging to ensure that the beverages can travel and avoid spillage.
Even though the company has been facing more and more competition from startup Luckin Coffee, which has said on many occasions it wants to overtake Starbucks, the company has seen steady growth. It said same-store sales growth in the country was 6 percent, and that it saw 2 percent more foot traffic in its stores.