Starbucks mobile orders make up record 22% of transactions; total Q3 sales sink 40% due to COVID-19

Outside Starbucks’ new Pickup store in New York City. (GeekWire Photo / Taylor Soper)

More people than ever are buying Starbucks food and drink with their phone.

The Seattle coffee giant said Tuesday that mobile orders reached a record 22% of transactions in its third fiscal quarter. Delivery orders also tripled from the previous quarter.

Starbucks is encouraging customers to order with its app for contactless payment amid the global pandemic, which led to a loss of approximately $3.1 billion in the quarter with reduced foot traffic, temporary store closures, and limited hours.

Global same-store sales sunk 40% in Q3, the company reported.

To help increase sales, Starbucks is speeding up plans to roll out a new store concept called Pickup designed for customers who order ahead with the app. Starbucks has been testing the strategy at two Starbucks Pickup stores in Manhattan and Toronto over the past year.

The company is also adding curbside pickup to more locations and equipping employees with handheld point-of-sale devices to help increase throughput in drive-thru lines, Starbucks CEO Kevin Johnson said on an earnings call Tuesday. It will also give customers new payment options for its Rewards program this fall.

Starbucks debuted its mobile order-ahead app feature (also known as Mobile Order & Pay) in late 2014 and it quickly caught on with Starbucks Rewards members — so much so that the innovation created a congestion problem inside stores.

After closing stores due to COVID-19, Starbucks began reopening locations in early May across the U.S. and Canada “with enhanced safety protocols and modified schedules.”

The company reported a non-GAAP Q3 loss of $0.46 per share, less than analyst estimates of $0.59, and revenue of $4.22 billion, beating estimates of $4.07 billion.

Shares of Starbucks are up more than 30% since a March dip, and were up 6% in after-hours trading Tuesday.

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