The Pilot Program
Concept: Starbucks partnered with a third party to prepare and deliver orders between 5 PM and 5 AM (when stores are traditionally closed).
Results: CEO Laxman Narasimhan claims the pilot doubled the company's business during that time frame.
Goal: Starbucks aims for a $2 billion business within five years using this model.
Why Late-Night Delivery?
Complements Existing Growth: This strategy supports Starbucks' strong US delivery business, which has seen growth in ticket size and total transactions.
Addresses Traffic Declines: Starbucks, like many QSRs, has experienced less foot traffic in recent quarters, making late-night delivery an attractive option to boost sales.
Key Takeaways
No Extended Store Hours: This program importantly doesn't require Starbucks locations to be open or staffing traditional baristas late at night.
Rival Strategy: Many competing QSRs are focusing on extending store hours, offering new snacks, and catering to late-night customers who want to visit in person. Starbucks chooses off-site preparation and delivery instead.
Analyst Skepticism: Some analysts are doubtful that expanding delivery hours alone can significantly offset Starbucks' recent challenges and declining traffic.
Additional Considerations
Who's the Partner?: Starbucks hasn't confirmed if this involves ongoing collaboration with GoPuff, or a new partnership entirely.
Innovation for Late-Night?: Will Starbucks create specific snacks or limited-time beverages tailored to late-night customers?
Competition: As more restaurants focus on late-night, Starbucks' delivery will need to stay competitive in speed and customer experience to succeed.
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