Starbucks talks up investment in its app and loyalty scheme as it hails “remarkable” quarter

Starbucks saw global sales rise by 18% to $4.9bn for the financial quarter ending 28 June as it toasted its highest ever-quarterly revenue and claimed that its strategy “to do more than just increase digital advertising” was paying off.

Howard Schultz, the chief executive of the world’s largest coffee chain, described the quarter as “remarkable” revealing that Starbucks saw a 4% increase in global traffic equating to serving 23 million more customer occasions over the previous year.

Starbucks also saw like-for-like sales increase by 7% for period, while net profit was up 22% to $626.7m

The impressive quarter was largely due to the opening of 431 new stores and it buying out its previous Japanese partner Starbucks Japan.

“Many traditional retailers and consumer brands have responded to the seismic consumer shift in bricks and mortar retail by substantially increasing their digital advertising budgets, significantly driving up their cost of customer acquisition and producing little to show for it,” said a defiant Schultz.

“We on the other hand, took a very different approach.”

That “different approach” has included a focus on aiding the in-store experience through its digital app.

Customers in the U.S. can now pay for their coffee digitally with Starbucks rolling out its “Mobile Order & Pay” service to 4,000 locations.

The digital payment app is resulting in “shorter queues, faster service and more efficient in-store operations” according to Schultz, who says it will look to launch the service into its international markets “in the months ahead”.

He also talked up its My Starbucks Rewards loyalty programme. The scheme now has 10.4 million active members, up from 28% in Q3 2014, with 6.2 million opting for the premium gold service.

He added: “By further enhancing our already world-class digital technologies through the introduction of capabilities like Mobile Order & Pay and soon to be delivery and expanding our loyalty programme, we are driving traffic as reflected in the 4% growth in traffic in Q3.

“Bringing in new customers and deepening our connection to our existing customers, elevating the Starbucks brand and our customer experience and streamlining our in-store operations are key to our success.”

Shultz also praised Starbucks tie-ups with other brands such as Spotify and The New York Times.

He concluded: “We strongly believe that no other bricks and mortar retailer has the brand strength, digital and physical assets or connection to consumers to create, build and execute a programme anything like this.”