NEW YORK — Testing is in progress at Starbucks Corp. to determine the best way to deliver a hot coffee to a customer’s door or desk. The Seattle-based company, which is conducting dual delivery experiments in New York and Northwest markets, has learned people will pay more to skip the lines at the coffee shop.
“Delivery has been something that people have asked for from us for many, many years, and we didn’t think we could get it right ourselves,” said Howard Schultz, chairman, president and chief executive officer, during a May 27 presentation at the Sanford C. Bernstein Strategic Decisions Conference in New York. “We didn’t know how to do it. How do you keep it hot? But the demand for delivery has become ferocious. And as a result of that, we started trying to find how we could do it.”
Starbucks learned a third-party delivery service called Postmates had been couriering its coffee to customers in various cities without the company’s involvement.
|Howard Schultz, chairman, president and c.e.o. of Starbucks.|
“So we got involved with Postmates and did a number of tests with them, and we figured out a way through our own technology and theirs that we could co-author a new foundational way to deliver Starbucks coffee in real time,” Mr. Schultz said. “And we also figured out that elasticity of charging for it is something people will pay for.
“So we’ll launch Starbucks with Postmates in the Northwest, and then, secondarily, we’re building a remote mini-commissary in the Empire State Building where we will deliver Starbucks coffee ourselves and on a parallel basis will test both Postmates and our own delivery.”
Several restaurant companies, including Chipotle Mexican Grill and McDonald’s, have partnered with Postmates to launch delivery in select markets. Others, such as Burger King and Panera Bread, have introduced delivery without a third-party service. For its BK Delivers program, Burger King developed special packaging to preserve the quality of its menu items.
“I suspect that you will see us do delivery in many cities around the world as this evolves,” Mr. Schultz said. “And we’re working on ways in which we can keep it warm. We’re designing vessels in which the coffee be maintained in a unique way.
“And I can tell you that we wouldn’t do this unless we could assure ourselves that the quality and the integrity of the product would be assured for the customer.”
Delivery is just one way in which the coffee company aims to maintain its strong sales momentum. Starbucks also recently initiated a mobile order and payment platform in Seattle and Portland, Ore., markets.
“We have our own internal metric of what Mobile Order & Pay will do,” Mr. Schultz said. “We are exceeding it, and it clearly will be an incremental driver of traffic, of throughput and speed of service, and fun for the customers.”
He added: “It’s actually been easier than we thought, but we’ve been planning this for a year.”
To stay ahead of seismic changes in consumer behavior, Starbucks is driving innovation at all levels of the company, in technology, store formats and menu items — with the willingness and ability to “fail fast and move on.”“There’s lots of people at Starbucks with big ideas, and we are trying to encourage, as large as we are, a very strong entrepreneurial aggressiveness to really doing things that people don’t see,” Mr. Schultz said. “I think one of the things we have to do as business people is we have to see around corners and be as curious as hell, and then have the courage and conviction to make big bets.”