A weaker than expected financial forecast and only moderate sales growth means that Starbucks has new plans in the works to increase revenue and that means offering delivery services. The Chief Executive Officer of Starbucks, Howard Schultz, announced plans for the later half off 2015 that will include delivery in some metropolitan areas. With the introduction of a mobile ordering system customers can place an order and pay for their beverages and food products prior to even entering a store. Using that same mobile ordering system, some customers will have the opportunity to place an order for their favorite food or drink and get it delivered to them at the office.
Although the company saw an increase of 10 percent in revenue because of sales growth in new stores, the projected outlook for the quarter which does include the upcoming holiday season is weaker than originally expected. While the report shows an increase in revenue, the company’s stock prices actually fell 5 percent when investors realized that earnings would not reach the projected amounts. Even with the rise in revenue which accounted for $4.2 billion, it was not enough to match the expectations set forth by Wall Street of $4.23 billion. Analysts were even predicting higher share prices than those that are now being forecast by Starbucks.
Delivery plans are not the only way that Starbucks intends to turn business around and increase company profits. The company introduced Fizzio soda drinks over the past summer and while the drinks do not appear to be matching expectations, there is still faith in that particular product offering. Starbucks also rolled out the customer favorite Pumpkin Spice Latte early this year to capitalize on those sales. Another area in which Starbucks is increasing their focus is in their offering of teas. The company recently purchased the Teavana chain which continues to operate and has expanded their offerings of tea products in their coffee shops as well.
Plans are still in the works for the company to open 100 specialty coffee shops. These shops would offer consumers a chance to taste the small batch Reserve brand of coffees. In the same line of thinking and in an effort to attract coffee lovers who prefer the better brews, Starbucks has already begun offering a specialty line of single origin coffees. This line of products will potentially attract coffee drinkers who prefer to know exactly where their drink of choice is coming from. Prices were raised earlier in the year on in-store beverages as well as packaged coffees, following an increase in the price of coffee. That particular increase does not seem to be hurting those sales numbers.
With Schultz already planning how to implement delivery services for Starbucks products, the company is looking ahead towards making a change to increase profits and revenue. Adding Teavana to the Starbucks family, creating stores dedicated to a more refined coffee drinking palette and potentially eliminating a trip outside to get one’s coffee, all seem like excellent business plans for increasing business for the coffee giant. Sadly, Starbucks fans will have to wait until at least the second half of 2015 before they will have their coffee fix delivered to their desk at work.
By Kimberley Spinney
Photo by Chris McClanahan – Flickr License