Starbucks will expand its Starbucks Delivers coffee delivery service across the U.S. by early 2020, extending its partnership with Uber Eats. The expansion follows an 11-market pilot rollout, which “demonstrated successful operational integration and received positive customer response,” according to a company statement.
In August 2018, Starbucks first launched a pilot of the Starbucks Delivers program in China through a partnership with Alibaba, leveraging the company’s on-demand food delivery service Ele.me. By the end of the year, delivery services had expanded to 2,000 stores across 30 cities in China.
As Starbucks expanded the program in China, it partnered with Uber Eats to bring Starbucks Delivers to both Miami and Tokyo in late 2018, and then brought delivery to 10 other U.S. markets and London by July 2019.
Currently, Uber Eats charges a $2.49 booking fee for Starbucks delivery orders and handles all the logistics of placing an order, picking it up and bringing it to the shopper’s door. Because orders must be made through the Uber Eats app, Starbucks customers can’t yet earn reward points.
Using Uber Eats, Starbucks customers can follow orders within the mobile app, tracking the progress and location of their Uber courier to ensure delivery of their purchases within 30 minutes.
Starbucks customers have access to approximately 95% of core menu items available directly from the Starbucks menu via Starbucks Delivery, and will be able to customize their orders as they would when ordering on the Starbucks mobile app.
The coffee giant is looking to take advantage of the significant growth within the food delivery industry. In 2018, the U.S. online food delivery market was estimated to be approximately $17 billion, and it is projected to grow to $24 billion by 2023.Uber is facilitating this growth; the company announced last year that it would offer delivery to more suburban and sparsely populated areas, aiming to reach 70% of the U.S. in 2019.
Uber Eats is one of many options that grocers and quick service restaurants now have to deliver food in a timely manner, with companies like DoorDash, GrubHub, Postmates, Caviar and Seamless all competing in the same field of hungry shoppers. Earlier this month, McDonald’s announced it would add DoorDash as a delivery partner in more than 200 restaurants across Houston, effectively ending what was once an exclusive partnership with Uber Eats.
The market has gotten so big that Domino’s Pizza CEO Ritch Allison cited these third-party delivery companies as potential barriers for its own delivery growth. Domino’s saw Q2 total sales and same-store sales miss estimates, but the company has elect to invest in its own delivery services to grow, most recently committing to roll out GPS tracking for delivery orders at all of its U.S. stores by the end of 2019.
With mobile turning on-demand food and coffee delivery into such a basic shopper expectation, and companies like Amazon, Walmart and Target all ramping up their standard delivery options, pressure will continue to mount as retailers try to invest further in both mobile and last-mile fulfillment capabilities.