Starbucks is embracing Drive-Thrus and Mobile beyond its Traditional Model

Starbucks is embracing Drive-Thrus and Mobile beyond its Traditional Model

  • More than two-thirds of Starbucks sales are now made through drive-through, mobile orders, or delivery.
  • Starbucks initially built its brand around being a “third place” with premium coffee.
  • Analysts say the change reflects Starbucks’ successful ability to adapt to changing trends.

Starbucks is moving further from its roots in favor of convenience and efficiency.

More than two-thirds of orders come from the mobile app, drive-through, and delivery now, the coffee giant said in an August earnings call. In other words, only 28% of customers go into Starbucks and place their orders with baristas, some of whom wait and drink their drinks on Starbucks property.

Customers seem to love the convenience of other ordering methods, and Starbucks is making it easier. About 90% of new drive-through locations are being built, The Wall Street Journal reported in May. About half of the locations have technology that allows customers to order via a tablet operated by workers in drive-thru lines, and 65% of locations plan to have them by the end of 2022, CEO Howard Schultz said in the call.

Starbucks has closed some underperforming malls in the past to focus more on the drive-through. The chain is considering drive-thru locations, and has already created pickup-only stores and partnered with Amazon to launch a joint Amazon Go store where only mobile orders and payments are accepted.

At first, Starbucks achieved great success by claiming a premium coffee experience and introducing espresso drinks like lattes to Americans. The chain presented itself as a “third place,” where people can gather outside of homes and workplaces. This concept is at odds with the chain’s more recent emphasis on convenience, shifting the definition of “third place” to “mindset” over physical space.

These changes at Starbucks don’t mean most locations will be without seating and space for customers together, Edward Jones analyst Brian Yarbrough told Insider. A focus on drive-thru and mobile ordering is an impact of the pandemic, but the shift in preference was happening before COVID-19 hit, Yarbrough said.

“The days of customers getting coffee and hanging out are probably behind it,” he told Insider. “They probably don’t need all this room for people to sit around.” The drive-thru has been more successful than locations without a drive-thru, he said, and could provide Starbucks with some savings if there were smaller seating areas to maintain.

Prioritizing these other ways to reach customers is key to what has made Starbucks so successful, because the chain is able to adapt to changing customer preferences, Yarbrough said. 75% of the drinks sold by Starbucks were cold, which was not. ‘not even part of the base register of the chain.

Other quick-service chains have similarly moved to prioritize the drive-through, too. Chipotle has focused on adding Chipotlanes to new locations and building drive-thru restaurants, which use mobile ordering. The benefits are similar to what Starbucks will be considering – drive thrus tend to have higher margins and will work faster.

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