Changes to Starbucks’ loyalty program are paying off.
In Q4, the Seattle-based coffee roaster and retailer updated its Starbucks Rewards – enabling loyalty members to earn rewards points with all forms of payment. Previously the only way to earn rewards was by paying with a Starbucks card.
Those changes are paying off. Enrollment in Starbucks Rewards has topped 21.8 active members, up 15% YoY.
“Our 90-day active Starbucks Rewards member base … increased by 2.5 million members in (its fiscal 2021) Q1 to a record 21.8 million,” explained CEO Kevin Johnson in a January 26 earnings call with analysts.
Loyalty Pays Off
As the number of active Starbucks Rewards members grew during the quarter, so did their engagement. Rewards customers contributed 50% of U.S. company-operated sales in Q1, up from 43% last year before the onset of COVID-19, and up from 47% in the prior quarter.
During Q1 fiscal 2021 ended December 27, 2020:
- Global comparable store sales declined 5%, driven by a 19% decrease in comparable transactions, partially offset by a 17% increase in average ticket.
- Americas comparable store sales declined 6%, driven by a 21% decrease in comparable transactions, partially offset by a 20% increase in average ticket; U.S. comparable store sales declined 5%, driven by a 21% decrease in comparable transactions, partially offset by a 19% increase in average ticket.
Fewer Orders, Bigger Tickets
When asked if the bigger tickets will continue as the pandemic slows, Johnson believes there will be “a long-term positive impact on ticket. …A big reason for the increase in ticket is group ordering … Customers are coming in and they are purchasing multiple beverages, multiple food items for larger groups than in the past, which is why traffic is down and ticket is up,” Johnson explained.
Across the country with dining rooms closed or at reduced capacity, customers have embraced off-prem in record numbers, including the drive-thru.
For Starbucks, over 60% of its U.S. company-operated stores are offering limited seating.
“U.S. stores with drive-thrus saw a slight improvement in out-the-window times and delivered positive comps throughout Q1. They drove over half of net sales in Q1, increasing more than 10% from pre-pandemic levels. These results give us confidence that our targeted initiatives to unlock capacity and enhance the customer experience at our drive-thru locations are boosting our business recovery, while strengthening our foundation for future growth,” Johnson said.
In addition to the drive-thru, Starbucks’ customers are embracing its mobile app. For Q1, mobile orders represented 25% of U.S. company-operated transactions, up from 17% before the pandemic.
“Our speed and agility has enabled us to rapidly adapt to changing consumer behaviors and strengthened our competitive position,” said Johnson.
On the Move
COO Roz Brewer has accepted a chief executive officer role at Walgreens and will be leaving Starbucks at the end of February.
Patrick Grismer, executive vice president and CFO, will retire from his position effective February 1. Rachel Ruggeri, senior vice president of Finance, Americas and a 16-year Starbucks partner, will succeed Grismer, who will remain with the company as an advisor through May 2, 2021.