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Starbucks Customer Traffic Stalls Amid Mobile Order Travesty

Starbucks Customer Traffic Stalls Amid Mobile Order Travesty
(Source: Starbucks)

Thursday, 27 April 2017 06:46 PM

Starbucks says its customer traffic has been stalled as it works on fixing the congestion created by its mobile order-and-pay option at some stores.

The coffee chain said U.S. sales rose 3 percent at established locations for the three months ended April 2, but that the increase was the result of higher average spending. Customer transactions were down.

Starbucks attributed the decline in transactions to a change in its loyalty program that led to people no longer splitting their orders to tally additional rewards points. Factoring in that change, the company said the number of transactions was flat from a year ago. Starbucks has said the popularity of its mobile order-ahead option has created crowds by pickup counters in some stores, causing some people who walk in to then leave without buying anything.

Chief Financial Officer Scott Maw says the company has implemented changes to address the congestion and that sales improved throughout the quarter, and that April has been even stronger. The changes include training employees to specifically handle mobile orders in stores. He said the company is also testing adding workers to help.

Starbucks says about 1,200 of its stores see a high volume of mobile orders — more than 20 percent of business during peak hours.

The results come after longtime CEO Howard Schultz stepped down earlier this month, handing the role to Kevin Johnson. Schultz remains executive chairman and is overseeing the expansion of a high-end concept called the Roastery.

As for the past practice of people splitting orders to collect more points, Maw said that slightly skewed past traffic figures.

"The reality is that over several years, those traffic numbers were off by some small amount," he said.

For the quarter, Starbucks Corp. earned $652.8 million, or 45 cents per share, in line with Wall Street expectations. Total revenue was $5.29 billion, short of the $5.42 billion analysts expected, according to FactSet.

Starbucks shares fell more than 4 percent in after-hours trading.

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Starbucks says its customer traffic has been stalled as it works on fixing the congestion created by its mobile order-and-pay option at some stores.The coffee chain said U.S. sales rose 3 percent at established locations for the three months ended April 2, but that the...
Starbucks, mobile, coffee, restaurant
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2017-46-27
Thursday, 27 April 2017 06:46 PM
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